CHINA allowed its currency against the U.S. dollar to rise to a three-month high Friday, extending the yuan’s recent advances after the Federal Reserve said U.S. interest rates would likely rise at a slower pace than previously thought.

    The People’s Bank of China (PBOC) fixed the yuan’s daily midpoint at 6.4628 to US$1, up 0.52 percent from the fix Thursday, according to the China Foreign Exchange Trade System.

    It marked the strongest level for the central rate since Dec. 16 as well as its biggest positive move since November.

    This was the third-largest appreciation of the fix since the yuan depegged from the U.S. dollar in 2005. After setting the exchange rate each day, the central bank allows the yuan to trade within a 2 percent band either side of it in onshore markets.

    Analysts had expected the central bank’s yuan fix to strengthen a day after the Japanese yen, the euro and several emerging-market currencies rose sharply against the dollar.

    The U.S. dollar has sunk since the Federal Reserve surprised markets by reducing its projections for interest rate increases this year, citing the slower global economy and market turmoil.

    “The market is now expecting the Fed to raise borrowing costs fewer times this year, which eases capital outflow pressures from emerging markets and supports Asian currencies, including the yuan,” said Kenix Lai, a foreign exchange analyst at Bank of East Asia in Hong Kong.

    (SD-Agencies)