China’s central bank maintained the same base rate for exchanging its currency against the US dollar on Monday, after pledging to allow gradual appreciation of the yuan.

The People’s Bank of China kept the daily mid—point of the yuan’s narrow trading band at Friday’s rate of 6.8275 to the dollar, it said on its website.

But rates from China’s main commercial banks rose as high as 6.8110 yuan to the dollar, about 0.2 per cent higher than Friday.

The slight shift was still the highest daily rise in the Chinese currency for nearly two years. It could prompt the central bank to raise the base rate on Tuesday, analysts said.

The positive sentiment from China’s latest commitment to allow currency appreciation also pushed up China’s two stock markets by about three per cent on Monday.

Shanghai Composite Index gains 72.99 points

The key Shanghai Composite Index, which tracks shares traded in both local and foreign currency, gained 72.99 points or 2.9 per cent, to close at 2,586.21 points on Monday.

The central bank earlier sought to dampen expectations of a rapid rise in the yuan, announcing on Sunday that there would be no one—off revaluation of the currency.

International analysts also played down the short—term impact of the new, more flexible policy promised by the bank on Saturday.

The central bank said it would aim to keep the yuan stable and that any changes in the exchange rate would be gradual.

But it said the country was now in a good economic position to loosen the rate, and it would lead to the creation of jobs.

The appreciation of the yuan should end a two—year peg to the dollar.

The move was welcomed by the United States and other major trading partners, who have long argued that the undervalued yuan gives Chinese exports an unfair advantage.