China strengthens yuan rate against dollar by 0.01%

China's central bank on Monday raised the value of the yuan against the US dollar by 0.01 percent, the national foreign exchange market said, after a devaluation last week rocked markets.

The daily reference rate was set at 6.3969 yuan to $1.0, slightly stronger than Friday's 6.3975, the China Foreign Exchange Trade System said.

Chinese authorities keep a tight grip on the currency and it is only allowed to fluctuate up or down two percent on either side of the reference rate.

Authorities had based the rate on a poll of market-makers, but last week shocked financial markets by suddenly cutting the value of the yuan nearly two percent and moving to what they say is a more market-oriented system.

The mechanism now also takes into account the previous day's close, foreign exchange supply and demand and the rates of major currencies.