The central parity rate of the Chinese yuan against the US dollar rose to exceed 6.72 on August 1, its highest since last October.
The unexpected growth followed market pessimism after the yuan ended last year with its biggest annual loss since 1994.
Things turned around this year when the US dollar began depreciating due to the country’s economic slowdown and Donald Trump’s surprise election as President of the United States. But analysts said it was driven domestically by the recovery of the Chinese economy – China’s GDP grew by 6.9 percent in the first half of 2017, higher than anticipated. Meanwhile, control policies curbed the flow of domestic capital abroad.
Analysts said continued growth through the second half of the year would depend on the Chinese economy and the US dollar. They suggested authorities loosen limits on the floating band of the yuan’s exchange rate, as the yuan stays at a relatively stable value.