China strengthens yuan against dollar, ending falls

 SHANGHAI, Aug 14, 2015 (BSS/AFP) - China's central bank today raised the value of the yuan against the US dollar by 0.05%, the national foreign exchange  market said, ending three days of falls after a surprise devaluation.
 The daily reference rate was set at 6.3975 yuan to $1.0, from 6.4010 the  previous day, the China Foreign Exchange Trade System said. That was also  slightly stronger than Thursday's close of 6.3982 yuan.
 The higher fixing for the yuan came after the People's Bank of China (PBoC)  reassured financial markets by pledging to seek a stable currency after a shock  devaluation of nearly two percent on Tuesday.
 The cut, and two subsequent reductions, sent global financial markets into  a tailspin as it raised questions over the health of the world's second-largest   economy and sparked fears of a possible currency war.  Beijing said the move was the result of switching to a more market-oriented  method of calculating the daily reference rate which sets the value of the  yuan, also known as the renminbi (RMB).
 Previously, authorities based the rate on a poll of market-makers, but will  now also take into account the previous day's close, foreign exchange supply  and demand and the rates of major currencies.
 The yuan is still only allowed to fluctuate up or down two percent on  either side of the reference rate.
 "Currently, there is no basis for the renminbi exchange rate to continue to  depreciate," PBoC assistant governor Zhang Xiaohui said Thursday.  "The central bank has the ability to keep the renminbi basically stable at  a reasonable and balanced level," she said.
Speaking earlier this week, another PBoC official said the central bank   could directly intervene in the market, after reports it bought yuan on   Wednesday to prop up the unit.
 "The central bank, if necessary, is fully capable of stabilising the  exchange rate through direct intervention in the foreign exchange market," PBoC  economist Ma Jun said.
 China keeps a tight grip on its currency on worries sudden fund outflows or  inflows could cause more financial risk and challenge its control, but it has  also pledged to move towards more flexibility.  Beijing is pushing for the yuan to become one of the reserve currencies in  the International Monetary Fund's SDR (special drawing rights) group.