Yuan increases amid drop

The central bank guided the yuan's central parity rate to higher ground on Monday hitting 6.1565 against the US dollar amid continual weakening in market trading in recent weeks.

The official rate is slightly higher than Friday's 6.1576, while the yuan fell to 6.2560 against the dollar during trading hours on April 25, a 16-month new low, and closing at 6.2536 by day's end.

Guan Tao, senior official from the State Administration of Foreign Exchange, shrugged off the recent yuan weakening as nothing abnormal. "The central parity rate of the yuan has risen by 36 percent from 2005 to the end of 2013," he said at a press conference on Friday. "It only recently pulled back by about 1 percent."

He said the rate of the yuan's fluctuation reflected by the futures markets is about 2.5 percent while that of currencies of the major developed and emerging-market economies is as high as 9 percent.

So far the market rate of the yuan has depreciated more than three percent since it first began to fall this year in late February, reflecting market concerns over the economic slowdown in the world's second-largest economy.

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

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

"We should not only look at the short-term fluctuations of the yuan," said Guan. "Instead, we should pay more attention to the middle and long-term trend."

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