Chinese yuan extends appreciation against USD

Xinhua/APP – The Chinese currency, the renminbi or the yuan, continued to strengthen against the greenback Friday due to a weak U.S. dollar and improved confidence on the Chinese economy.

The yuan's central parity rate appreciated 160 basis points to 6.2885 against the U.S. dollar, the strongest in around two years and a half, according to the China Foreign Exchange Trade System.

On onshore and offshore markets, the currency also surged.

Analysts attributed the strong performance to slips in the U.S. dollars. The dollar index, a gauge that measures the U.S. currency's strength against six other major currencies, has declined over 5 percent since December.

The index will more likely continue the losing streak as macro economy and policy factors are expected to restrain the strength of the U.S. dollar, ICBC International economist Cheng Shi said in a report.

Meanwhile, global investors have become more optimistic about China's economic outlook. The country's GDP expanded 6.9 percent last year, picking up for the first time in seven years and well above the government's annual target of around 6.5 percent.

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

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