The daily reference rate set by the People's Bank of China rose to a record high on the second trade session of the week. However, governor Zhou Xiaochuan with the central bank of the Asian nation said the bank is not deliberately watering down the value of the yuan.
"The PBOC is accommodating that appreciation because if they don't then the PBOC will be forced to intervene in the market and accumulate foreign-exchange reserves that are already at a high level," senior strategist Khoon Goh with Australia & New Zealand Banking Group Ltd. in Singapore told Bloomberg on Tuesday.
China's monetary authority pushed up the reference rate by 0.11 percent to a record high of 6.1735 per dollar. But Credit Agricole CIB stated in a note on Monday that the yuan will slump, which will have an impact on the competitiveness of Chinese exporters.
The Asian nation allowed 15.6 billion yuan in mainland investment quotas in May, according to Reuters. Thus far this year, that notes the biggest monthly investment in capital markets.
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