The Chinese yuan strengthened by 0.16 percent against a basket of currencies in October despite weakening against the U.S. dollar, according to data released by the China Foreign Exchange Trade System (CFETS) Friday.
The yuan exchange rate composite index, which measures the yuan's strength relative to a basket of 13 currencies, including the U.S. dollar, euro and Japanese yen, came in at 94.22 at the end of October, up from 94.07 a month earlier, the CFETS said in a statement.
The index that measures the yuan against the Bank for International Settlements currency basket strengthened by 0.34 percent month on month to 95.07, while the index that measures against the Special Drawing Rights basket strengthened by 0.49 percent from a month earlier to 95.52.
The figures showed that the yuan is basically stable against a basket of currencies, though expectations for an interest rate hike in the United States and fears over Britain's exit from the European Union have led to a stronger dollar, the CFETS said.
As the dollar index, which measures the dollar against six major currencies, rose to its highest level in eight months in October, the yuan weakened against the dollar "in order to maintain stability against a basket of currencies," it noted.
The central parity rate of the Chinese currency against the dollar weakened to 6.7858 last week, a six-year low, before gaining a bit this week, losing 1.28 percent in value for October.
The market rate against the dollar weakened by 1.49 percent in October, according to the CFETS.
However, compared to other emerging economies and developed economies, China's currency depreciation was relatively small, it said.
In October, the euro zone, Japan and Singapore saw their currencies weaken by 2.05 percent, 3.02 percent and 1.87 percent, respectively, against the dollar.
"Overall, the market does not worry about the yuan's fluctuation," the CFETS said.
As history shows the impact of U.S. interest rate hikes largely plays out early, there are "relatively big uncertainties" over the dollar's value in the future and the yuan will keep moving against the dollar in both directions, according to the CFETS.
It also cited China's healthy financial and fiscal fundamentals, improving economic data and the yuan's recent inclusion in an elite reserve currency basket as factors to support the currency's stability.
The yuan exchange rate composite index was first released in December 2015 to offer a more comprehensive reflection of exchange rate changes. Previously, analysts were mainly fixated on the yuan-U.S. dollar rate.
