China denies manipulation of its currency

China's Foreign Ministry spokesman Hong Lei denied Wednesday that China has manipulated its currency, after the yuan rose against the US dollar to a near two-decade high.

Speaking at a regular news briefing, Hong said that the yuan's exchange rate has entered a state of equilibrium this year without any manipulation.

China will continue to promote reforms of the way the yuan exchange rate is determined, Hong said.

Hong's comment came after a Tuesday statement by US Republican presidential candidate Mitt Romney, who repeated his previous pledge to label China as a currency manipulator on his first day in office and introduce punitive tariffs on imports of Chinese goods.

China's central bank set the central parity rate of the yuan against the US dollar at 6.3028 Wednesday - compared to Tuesday's 6.3106 - the highest fixing since late June.

In China's foreign exchange spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day. The yuan touched a 19-year high of 6.2530 per dollar during Wednesday trading.

Analysts said the central bank's move signals it is becoming more tolerant of the appreciation of the yuan.

"China has pushed the central parity rate upward mainly for political purposes, as it wants to appease US criticisms of its currency policy," Liu Dongliang, a currency analyst at China Merchants Bank, told the Global Times Wednesday.

"The US third round of quantitative easing in September has put downward pressure on the traded value of the US dollar, while propping up that of the yuan," Wei Jun, an analyst at FX168 Financial Group, told the Global Times.

"Given recent positive figures for China's economy, investors are enthusiastic about the yuan again," Wei said.