China's central bank guided the yuan higher at the sharpest pace since 2005 on Friday in a move analysts attributed to the dollar's weakness against major currencies.
The central bank, the People's Bank of China (PBOC), set the midpoint of the yuan trading band against the dollar at 6.4589, down 0.56 percent compared with the previous fix at 6.4954. That's the biggest change since 2005, when China removed its peg to the dollar.
The pair was trading at 6.4743 midday Friday, compared with Thursday's close 6.4779.
The PBOC allows the yuan spot rate to rise or fall a maximum of 2 percent against the official fixing rate, which is set daily.
The cause of the jump in the yuan's level may be driven by forces outside China. The dollar index, which measures the dollar against a basket of currencies, has fallen 1.7 percent this week. The Japanese yen, in particular, has risen sharply against the greenback.
"Blame the Bank of Japan (BOJ)," said Patrick Bennett, a foreign-exchange strategist at CIBC. He noted that China now manages the renminbi against a trade-weighted basket of currencies. The BOJ's surprise decision Thursday to sit pat on policy caused the yen, one of the basket's components, to surge. The yen composes nearly 15 percent of the currency basket.