China's yuan firms after official reassurance

The yuan surged on Monday after the central bank chief reassured investors there is no basis for persistent depreciation.

The reference rate of the yuan rose to 6.4941 against the U.S. dollar at 7:00 p.m., up over 1.2 percent from Feb. 5, the previous trading day before the week-long holiday.

The rise dispelled market concerns and came after comments from Zhou Xiaochuan, governor of the People's Bank of China, in an interview with magazine "Caixin."

Zhou said that there is no basis for the continued depreciation of the yuan and that "China would not let market sentiment be dominated by speculative forces."

The central parity rate of the yuan strengthened by 196 basis points to 6.5118 against the U.S. dollar on Monday.

The strong performance reversed drops in January when the market was permeated by depreciation talk.

Depreciation pressure has been eased due to sharp declines in the U.S. dollar index and weakening expectations since the beginning of February of a Federal Reserve's rate hike.

Global stock markets and crude prices fell heavily last week. "Given the volatility in overseas markets, the yuan turned out to be a safe haven," said Xu Hanfei, an analyst with Guotai Junan Securities.

Analysts expect the yuan to remain stable. Endi