China's central bank set the U.S. dollar-yuan (renminbi) central parity rate, an official reference for daily trading, at a new record high on Wednesday.
The People's Bank of China strengthened the yuan's reference exchange rate to CNY 6.1980 against the greenback, up 103 basis points from Tuesday, the highest since Beijing revalued the Chinese currency in July 2005, according to the China Foreign Exchange Trading System.
China's central bank fixes the central parity rate every morning, and since April 16 last year, it allows the currency to rise or fall by 1.0 percent from the central parity rate.
The decision by the People's Bank of China enables the yuan to trade in a wider daily range against the dollar in order to meet market demands and enhance the flexibility of yuan exchange rate. Previously, the daily trading limit was fixed at 0.5 percent. The dollar-yuan central parity rate is based on a weighted average of prices before the opening of the market each trading day.