PBoC Allows Yuan Appreciation

The Chinese yuan climbed today after China’s central bank lifted the reference rate, following the downgraded of the US credit rating, signaling that the policy makers aren’t bothered by the currency’s gains.

The People’s Bank of China put its reference rate 0.23 percent higher at 6.4305 per dollar, allowing the yuan to trade up to 0.5 percent on either side of the official rate. The current level of the rate is the highest since November. China doesn’t worry about the appreciation of its currency, but is concerned that the dollar will continue to drop as the nation is the biggest holder of Treasuries.

USD/CNY traded at 6.4362 as of 11:51 GMT after falling from 6.4416 to 6.4265 earlier.

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