The yuan traded briefly yesterday at the strongest level since 1993 despite the Chinese central bank lowering the central parity rate in a bid to help the currency appreciate.

 

The yuan yesterday touched 6.2812 per US dollar during daily trading, 0.98 percent stronger than the central parity rate, before closing weaker at 6.2872. It can trade at 1 percent on either side of the parity rate set by the People's Bank of China.

 

The PBOC yesterday set the daily fixing at 6.3426 against the US dollar, slightly weaker than 6.3410 on September 27. The financial markets reopened yesterday after being closed for eight days for the Mid-Autumn festival and the National Day holidays.

 

"The yuan constantly traded above the central parity rate, indicating the appreciation momentum for the currency has become stronger than before," said Zhao Qingmin, an economist with China Construction Bank.

 

In Hong Kong's offshore market, the yuan gained 0.05 percent to 6.2945 per dollar. Twelve-month non-deliverable forwards, usually watched as an indication of the yuan's future performance, firmed 0.04 percent to 6.3930.

 

Robert Minikin, an economist at Standard Chartered Bank, said yesterday the yuan may appreciate mildly next year against the weakening US dollar. He also said that the PBOC may keep interest rates flat while lowering reserve requirement ratio for banks.
 

 

Standard Chartered expects the Chinese currency to trade at 6.19 against the US dollar by the end of 2013. 

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