BEIJING – The Chinese yuan rose to its highest level since December 2015 on Tuesday driven by the weakness of the US dollar and the inclusion of the currency into the German central Bundesbank reserves.
The China Foreign Exchange Trade System said Tuesday that the yuan had risen 202 basis points to 6.4372 against the dollar index, which gauges the dollar’s strength against six other major global currencies, known as an International Monetary Fund (IMF) basket.
Analysts expect the yuan to continue to strengthen in the coming days, supported by the strength of China’s economy, with growth figures for 2017 expected on Thursday, and forecasts of a further weakening of the dollar, according to state news agency Xinhua.
On Monday, the Bundesbank followed the recent decision of the European Central Bank to include the yuan in its reserves.
The IMF had approved this inclusion in November 2015 and implemented it in October 2016, which IMF director, Christine Lagarde, had considered an important milestone for the integration of the Chinese economy into the global financial system.
Currently, the select group of currencies that make up the IMF basket consists of the US dollar, the euro, the pound sterling, the Japanese yen and the yuan, which determines the value of special drawing rights (SDR), the currency used by its 188 member countries for their reserves or transactions.