China’s renminbi continues to rise against the weakening U.S. dollar, as the offshore currency rose above the 6.4-yuan mark on Tuesday afternoon and marked the strongest since June 2018.

The onshore renminbi also hit 6.4021 yuan per U.S. dollar during the day and closed at 6.4078 yuan, marking the highest level in the past three years.

The sharp rise drew the attention of the People’s Bank of China — the country’s central bank — with Reuters reporting on Tuesday that major state-owned banks were seen buying U.S. dollars at around 6.4 yuan per dollar.

The move was believed to be an “effort to curb fast yuan appreciation to breach the key level,” the newswire reported, citing sources familiar with the matter. The rise was a “tad below the psychologically important 6.4 per dollar level,” the report added.

Liu Guoqiang, deputy governor of the People’s Bank of China, said earlier that the renminbi has risen and fallen this year with fluctuations at a reasonable equilibrium level, and that the exchange rate is determined by the market.

While China is the largest centrally planned economy in the world, Liu said that a managed floating exchange rate system will remain the country’s strategy for some time in the future in the face of the global COVID-19 pandemic.

Managing Director at DBS Bank, Tommy Ong, maintained the forecast of 6.25 yuan per U.S. dollar at the end of the year, describing it as the “bottom line” of its appreciation.

Unless the U.S.-China trade talks are restarted, otherwise it would pose a big obstacle to renminbi, he added.

The renminbi’s rise above the 6.4 per dollar level is the general trend, said Carie Li, an economist at the OCBC Wing Hang Bank.

The strong trade surplus and foreign direct investment net inflow have increased the demand for the renminbi, Li explained. It was coupled with the increase in the holdings of treasury bonds by many foreign investors, she said.

There have been no signs that U.S. President Joe Biden would reinitialize trade dialogues with Beijing any time soon.

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