Investing.com – The yuan climbed to a 5-year high against the U.S. dollar on Monday as the Chinese central bank loosened its grip over the currency on the first trading day after China pledged limited forex reform.
USD/CNY shed 0.45% to close at 6.798, its lowest since July 2005, when policymakers unpegged the yuan from the dollar and moved to a managed floating exchange rate.
Analysts believe that while the Chinese currency will strengthen further in the coming days, it will do so at a modest pace.
The People's Bank of China on Saturday said it would "strengthen the flexibility" of the yuan exchange rate. The move came ahead of this weekend's G20 summit of world leaders in Canada, and amid criticism that Beijing has been gaining an unfair trade advantage during the global downturn.
On Sunday, the central bank ruled out a one-off revaluation, saying it would keep the exchange rate at a basically stable level and that there was no basis for large appreciation.
USD/CNY shed 0.45% to close at 6.798, its lowest since July 2005, when policymakers unpegged the yuan from the dollar and moved to a managed floating exchange rate.
Analysts believe that while the Chinese currency will strengthen further in the coming days, it will do so at a modest pace.
The People's Bank of China on Saturday said it would "strengthen the flexibility" of the yuan exchange rate. The move came ahead of this weekend's G20 summit of world leaders in Canada, and amid criticism that Beijing has been gaining an unfair trade advantage during the global downturn.
On Sunday, the central bank ruled out a one-off revaluation, saying it would keep the exchange rate at a basically stable level and that there was no basis for large appreciation.