1st Ld-Writethru: China's yuan strengthens to two-year high on USD weakness

BEIJING, Jan. 26 (Xinhua) -- The central parity rate of the Chinese currency yuan Friday reached its strongest level against the U.S. dollar in more than two years, supported by the weakness of the greenback.

The central parity rate of the yuan advanced for the sixth consecutive trading day to 6.3436 against the dollar, the strongest level since Nov. 5, 2015, according to the China Foreign Exchange Trade System.

The dollar index, which measures the greenback against a basket of six major currencies, declined to as low as 88.438, the lowest in about three years after U.S. Treasury Secretary Steven Mnuchin said at the World Economic Forum in Davos that the country welcomed the weakness of the currency.

However, the dollar index rebounded slightly to 89.379 in late trading after U.S. President Donald Trump told CNBC in an exclusive interview that ultimately he wanted to see a strong dollar and that Mnuchin's comments were taken out of context.

The dollar index has declined 3 percent this year.

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. Enditem