The Chinese yuan marked its biggest gain in roughly eight weeks against the world's reserve currency on Thursday after the central banks of the Asian nation and Europe announced a pact for a currency swap line, according to Bloomberg.
The People's Bank of China and the European Central Bank have embarked on a three-year swap minimum of 350 billion yuan, a Thursday statement issued by ECB indicates. The renminbi also continued advancing in the aftermath of the White House nomination of stimulus-friendly Janet Yellen as successor to Ben Bernanke as U.S. Federal Reserve chair.
"Investors are in wait-and-see mode, given the uncertainty over the U.S. debt ceiling," director Daniel Chan with China Silver Global Investment Consultant Ltd. in Hong Kong told the news source on Thursday. "It looks like lawmakers are working to avoid chaos. Yellen is known to be more dovish, so tapering under her leadership will be gradual. That would be positive for the yuan."
The yuan rose about 0.09 percent against the U.S. dollar, notating its top gains since the middle of August.
The agreement between the two central banks enhances the status of the yuan as a potential world reserve currency, according to Reuters. China has long driven toward that end.
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