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BEIJING, March 29 (Xinhua) -- The central parity rate of the renminbi, or the yuan, weakened 133 basis points to 6.8915 against the U.S. dollar Wednesday, according to the China Foreign Exchange Trade System.
The central bank on Wednesday, for the fourth consecutive business day, skipped the open market operations of reverse repos, a process where it purchases securities from banks with an agreement to sell them back in the future.
"China may pursue a balanced liquidity supply tilting toward tightening and increases to the cost of capital, as the central bank aims to reduce the debt level at financial institutions," according to a report by Hua Chuang Securities.
Meanwhile, China will steadily liberalize the yuan's use on the capital account, which makes the currency convertible for investment purposes, as part of the wider strategy to make the yuan a global currency, according to the central bank.
More should be done to enhance the yuan's role in investment, reserves and financial transactions. When pushing for the currency's use in cross-border transactions, it needs to be convertible on the capital account, according to Yi Gang, deputy central bank governor.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
