To the Chinese currency. The Renminbi is up again, today closing at 6.5915 to the US dollar. Our reporter Mi Jiayi has been looking into it .

 

China's central bank had set the central parity rate of the renminbi at 6.6102 against the US dollar today, 191 basis points stronger than yesterday. That adjustment came after a rise of 60 basis points on Tuesday. It all puts the Chinese currency at its highest levels since August of last year. Going in just the other direction, the dollar has been falling against major currencies. The dollar index, which tracks the greenback's value against a basket of six major currencies, last stood at 92.337, close to its lowest levels since since January of 2015.

 

LIU JIAN, SENIOR ANALYST BANK OF COMMUNICATIONS Due to the political impact of US President Donald Trump, and a continuing stronger EU economy, the US index began to weaken. This has provided a perfect environment for the RMB to rise. Whether the US Federal Reserve will raise rates depends on the situation of the US economy, which is to say the employment rate and inflation situation. The inflation situation has failed to beat expectations for three months, so it's not a good time to talk about any interest rate hike at the moment. Janet Yellen's failing to mentioning this topic at the weekend's Fed conference also led the market to expect that the US dollar will continue to weaken in the short term.

 

Liu says the yuan's rally has also been supported by the steady growth of the Chinese economy. It expanded 6.9 percent in the first half, well above the target of roughly 6.5 percent for the year. The government has been keeping capital outflows on a tight leash since the beginning of the year, with the result that forex reserves have been growing for six months in a row. Liu says the growth in forex reserves has helped the value of the Renminbi as well.

 

LIU JIAN, SENIOR ANALYST BANK OF COMMUNICATIONS In the medium and longer term, the RMB is still facing downward pressure as China's economy continues to slow. Currently, the depreciation anticipation of the RMB is not as strong as it was, but it is still there. I think the government will continue its macro and micro supervision of capital outflow. But since the RMB is strengthening for the moment, we might see some speed-ups in approvals for reasonable overseas investments. That all depends on market reaction, however.

 

China began to allow the market to play a bigger role in exchange rate formation in August of 2015. The spot price of the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.