2nd LD-Writethru: Chinese yuan continues to strengthen against USD

BEIJING, Feb. 27 (Xinhua) -- The Chinese currency, the renminbi or the yuan, remained strong Tuesday as its central parity rate against the greenback strengthened for a third trading day.

The yuan's rate appreciated by 232 basis points to 6.3146 against the U.S. dollar Tuesday, the biggest gain since the beginning of this month, according to the China Foreign Exchange Trade System. The onshore and offshore yuan also rallied.

The performance was mainly attributable to a weak U.S. dollar, which still lacks gaining momentum despite market speculations for as many as three rate hikes by the Federal Reserve this year.

Meanwhile, the yuan has been stable due to sound economic fundamentals, solid expectations, and balanced supply and demand. The first month of 2018 saw the yuan's central parity rate gain more than 3 percent against the U.S. dollar.

Analysts believe the yuan's exchange rate will maintain stable in the long term with more "two-way movement."

Following strong performance since January, the currency will likely retreat in the next two months as the demand for foreign currencies is expected to pick up, said Xie Yaxuan, an analyst with China Merchants Securities.

"Trade companies usually boost overseas purchases of materials for production in the period. The rising demand for other currencies will affect the yuan's exchange rate," Xie said.

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