China's yuan (RMB) on Tuesday strengthened against the U.S. dollar to its highest level in more than a year on a firmer economy and weaker greenback.
The central parity rate of yuan strengthened 60 basis points to 6.6293 against the U.S. dollar Tuesday, according to the China Foreign Exchange Trade System.
The adjustment came after a rise of 226 basis points Monday, reaching the highest level since August last year.
The dollar slipped to a 15-month low against the other major currencies in late trading on Monday after Federal Reserve Chair Janet Yellen did not mention monetary policy at a central bankers' summit and as the euro remained broadly supported.
More than two years after China changed its "central parity system" to let the market play a bigger role in exchange rate formation, yuan stands tall against the US dollar with stabilized market expectations.
"A sound economic fundamental is the main reason for RMB's rise," said Fan Ruoying, a senior analyst with the Bank of China.
China's economy expanded 6.9 percent in the first half of the year (H1), well above the target of around 6.5 percent for the year.
Balanced and stable cross-border capital flow has also supported RMB's rise, Fan said.
Cross-border capital flow has stabilized in H1, and the supply and demand in the forex market has reached the most balanced level in about three years, according to the State Administration of Foreign Exchange.
In China's spot foreign exchange market, yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
The central parity rate of yuan against U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
