China's central bank lifts yuan mid-point to highest since May 2016

An employee at a currency exchange store counts Chinese one-hundred yuan banknotes in Hong Kong.
An employee at a currency exchange store counts Chinese one-hundred yuan banknotes in Hong Kong.PHOTO: BLOOMBERG

SHANGHAI (REUTERS) - China's central bank lifted its official yuan midpoint to the highest level in over 1½ years to 6.4920 per dollar on Wednesday (Jan 3), breaching a key threshold, reflecting broad US dollar weakness and solid spot yuan performance.

Wednesday's official midpoint was 159 pips, or 0.24 per cent, firmer than the previous fix of 6.5079 on Tuesday and was the strongest since May 3, 2016.

The strength in the official yuan midpoint follows a weaker US dollar, which fell on Tuesday to its lowest in more than three months on expectations of a slower pace of interest rate increases by the Federal Reserve.

China's yuan rose to its firmest against the US dollar in nearly four months in thin trade on Tuesday, breaching the psychologically important 6.5 per dollar level.