Yuan reference rate continues to climb

The People's Bank of China raised the yuan's daily reference rate by 0.13 percent to 6.3005 a US dollar on June 18, more than 1 percent higher than the previous trading day.

This is the fourth day that China hiked the reference rate. But as of 4:30 pm, the real trading rate was 6.3573, according to the China Foreign Exchange Trade System.

The yuan is allowed to fluctuate up to 1 percent on either side of the reference rate.

The Greek elections and expectations of more stimulus measures triggered "risk-on sentiment", and China is showing its Western peers that it hasn't guided the yuan to weaken with the stronger reference rates, Bloomberg quoted Tommy Ong, a Hong Kong-based senior vice-president of treasury and markets at DBS Bank (Hong Kong) Ltd, as saying.

The yuan's reference rate set by the central bank against the dollar has even fallen by 0.93 percent in June.

Although the dollar has been picking up against the yuan, the effective exchange rate of yuan — comprising the yuan's trading price against main world currencies — showed that pressure of the yuan's appreciation on exports might still be big.

According the Bank of International Settlements on June 15, the effective exchange rate index of the yuan in May went up by 2 percent from April to 109.72, the highest since the bank started publishing the data in 1994.

The yuan, however, appreciated by 5.52 percent against the euro last month.

Analysts have worried that a higher effective exchange rate would post greater pressure on China's exports and jeopardize growth in the world's second-largest economy.