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Renminbi strengthens to fresh 14-month high

The renminbi hit a 14-month high against the dollar on Friday after the country’s central bank set the currency’s trading band firmer and the latest reading on China’s manufacturing sector came in better than expected.

The onshore exchange rate (CNY) for the renminbi firmed as much as 0.2 per cent to Rmb6.5783 per dollar, the strongest level against the greenback since June 2016. The People’s Bank of China on Friday morning had set the trading band around which the currency can trade 2 per cent in either direction 0.2 per cent firmer from the previous day at Rmb6.5909 per dollar.

The offshore exchange rate for the renminbi (CNH), which is not bound by the onshore rate’s trading band, advanced as much as 0.3 per cent to Rmb6.5781, marking the first time since late June last year said rate has breached the Rmb6.6 per dollar mark.

China’s currency first rose to its strongest level against the dollar in 14 months on Tuesday as the dollar index touched its softest level since May 2016.

The greenback has sagged against its global peers in 2017 as initial expectations of an improvement in business conditions under President Donald Trump unravelled. After signs earlier this month the greenback could mount a comeback, there has been further pressure this week with impact of Hurricane Harvey, renewed tension over North Korea and a lack of clear direction on monetary policy from Federal Reserve chair Janet Yellen over the weekend.

Meanwhile, China’s factories outperformed again in August as export orders expanded at the fastest rate in more than seven years, according to the Caixin-Markit manufacturing purchasing managers’ index, released on Friday.