China strengthens yuan rate against dollar by 0.01%

A vendor holding Chinese yuan notes at a market in Beijing on Aug 12. China's central bank has raised the value of the yuan against the US dollar by 0.01 per cent following last week's shock devaluation
A vendor holding Chinese yuan notes at a market in Beijing on Aug 12. China's central bank has raised the value of the yuan against the US dollar by 0.01 per cent following last week's shock devaluationPHOTO: REUTERS

SHANGHAI (AFP) - China's central bank on Monday raised the value of the yuan against the US dollar by just 0.01 per cent, the national foreign exchange market said, after a devaluation last week rocked markets.

The daily reference rate was set at 6.3969 yuan to the dollar, slightly stronger than Friday's 6.3975, the China Foreign Exchange Trade System said.

The yuan closed at 6.3946 on Monday, stronger than the daily fix but weakening 0.05 per cent from Friday's close of 6.3912.

Chinese authorities keep a tight grip on the currency and it is only allowed to fluctuate by two per cent on either side of the reference rate.

Authorities had based the rate on a poll of market-makers, but last week shocked financial markets by suddenly cutting the value of the yuan nearly five per cent over a three-day period and moving to what they say is a more market-oriented system.

The mechanism now also takes into account the previous day's close, foreign exchange supply and demand, and the rates of major currencies.