Mumbai, July 21: The rupee shot up to a six-year peak against the dollar today after China revalued the yuan, which till now had a fixed rate against the greenback. The rupee ended at 43.22 per dollar, a gain of 31 paise over its previous close of 43.52, fuelled by talks of a huge trade benefit accruing to India from the revaluation.

The People's Bank of China announced that the Chinese currency will no longer be confined to a fixed rate against the dollar. It valued the yuan at 8.11 against 8.28 earlier.

Though forex dealers had expected the revaluation, its timing caught them unawares. Reacting to the Chinese move, the rupee hit an intra-day high of 43.16.

“The revaluation of the Chinese currency will benefit Asian countries like India as their exports become competitive. This trade benefit was the driving force behind the rupee’s rally today,” an analyst from Mecklai Financial told The Telegraph.

As the announcement from The People's Bank of China came towards the close of trading hours, a large section of the market players, including exporters, could not participate in the day’s action.

A section of the market, therefore, feels exporters are likely to sell dollars tomorrow, resulting in more gains for the Indian currency in the short term.

“With more panic sales of the dollar expected, the rupee may hit the 43-mark to a dollar soon,” an official from a leading private sector bank said.

He, however, added that the Reserve Bank of India (RBI) could intervene if the rupee’s rise was sharp.

“The RBI had intervened aggressively through public sector banks when the rupee hit the 42.80-mark to a dollar. We will have to see whether the central bank steps in now or allows the rupee to find its own level,” sources said.

However, the RBI said there would be no change in its current exchange rate policy.

“The policy in recent years has been guided by the broad principles of careful monitoring and management of exchange rates with flexibility, without a fixed target or a pre-announced target or a band, coupled with the ability to intervene when necessary,” the RBI said.

The rupee has been hovering around 43.50 against the dollar, largely due to strong inflows from foreign institutional investors (FIIs).