Chinese yuan rises to strongest against USD in over a year

BEIJING -- The Chinese currency on Tuesday strengthened against the U.S. dollar to its highest level in more than a year.

The central parity rate of the Chinese currency, the renminbi or the yuan, strengthened 60 basis points to 6.6293 against the U.S. dollar Tuesday, according to the China Foreign Exchange Trade System.

The adjustment came after a rise of 226 basis points Monday, reaching the highest level since August last year.

The dollar slipped to a 15-month low against the other major currencies in late trading on Monday after Federal Reserve Chair Janet Yellen did not mention monetary policy at a central bankers' summit and as the euro remained broadly supported.

More than two years after China changed its "central parity system" to let the market play a bigger role in exchange rate formation, China's currency stands tall against the U.S. dollar with stabilized market expectations.

"A sound economic fundamental is the main reason for the yuan's rise," said Fan Ruoying, a senior analyst with the Bank of China.

China's economy expanded 6.9 percent in the first half, well above the target of around 6.5 percent for the year.

Balanced and stable cross-border capital flow has also supported the yuan's rise, Fan said.

Cross-border capital flow has stabilized in H1, and the supply and demand in the forex market has reached the most balanced level in about three years, according to the State Administration of Foreign Exchange.

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.