China's central bank Friday guided the yuan higher against the dollar by the fastest pace this year, leaving some analysts puzzled by the size of the move.
The People's Bank of China (PBOC) set the mid-point of the dollar-yuan trading band at 6.4905, its strongest level so far this year. The pace of the increase versus the previous day's fix was the fastest since November last year.
Friday's fix compares with the onshore spot trade close of 6.5075 Thursday. China's central bank lets the yuan spot rate rise or fall a maximum of 2 percent against the dollar relative to the official fixing rate.
Policymakers on the mainland now generally consider the yuan's level against a basket of the currencies of China's trading partners, although it still publishes the daily fixing against the dollar.
That means the dollar's sharp overnight decline against the euro should have strengthened the yuan, but some analysts said the move was larger than can be explained by those fluctuations.