CHINA’S central bank Friday responded to an overnight tumble in the U.S. dollar by raising the exchange rate for the yuan by 0.56 percent from the previous day, the biggest increase in almost 11 years.

    The People’s Bank of China fixed the yuan at 6.4589 to the greenback, according to the China Foreign Exchange Trade System, which operates the national foreign exchange market.

    It was the strongest daily increase in the rate since July 2005, Bloomberg reported.

    China only allows the yuan to rise or fall 2 percent on either side of the daily fix to prevent volatility.

    “This is a reaction to the dollar weakness overnight and there’s not much in the way of policy intention to read into,” said Ken Cheung, Hong Kong-based currency strategist at Mizuho Bank.

    The U.S. dollar plunged against the Japanese yen Thursday, after the Bank of Japan shocked markets by refraining from ramping up its stimulus.

    “The expectation for a stronger yuan fix was laid by the gains for the yen after the Bank of Japan announcement,” said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong.

    On Friday, the onshore yuan was quoted at 6.4729 to the dollar, up 0.14 percent from the previous day.

    The dollar headed for its the lowest close in almost a year Friday as signs of slowing growth in the United States dimmed prospects for a Federal Reserve interest rate hike. (SD-Agencies)