Chinese yuan strengthens to 7.0008 against USD Thursday

The central parity rate of the Chinese currency renminbi (RMB), or the yuan, strengthened 72 pips to 7.0008 against the U.S. dollar Thursday, according to the China Foreign Exchange Trade System.

The new rate was the strongest since August 8, 2019, according to data from the system.

Cao Yuanyuan, an analyst with Golden Credit Rating International Co.,Ltd., attributed the strengthening of the yuan to China's enhanced countercyclical adjustment, indicated by decreased interest rate of medium-term lending facility (MLF).

Enhanced attraction of RMB assets due to China's policies to deepen opening-up also contributed to the surge of the yuan, Cao said.

Cao also noted the progress in the China-U.S. trade negotiations since last month, which, together with the resilience of China's economy, laid foundations for the continuous rises of RMB recently.

Analysts predicted that the yuan will remain strong in the near future. The RMB exchange rate may return within the 7-yuan-per-dollar mark if the China-U.S. trade talks run smooth, noted Zhao Qingming, a specialist of international finance.

In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.