(Bloomberg) — The yuan rallied past the 7 per dollar milestone for the first time in 16 months as investors digested a raft of measures to support the Chinese economy and the recent Federal Reserve rate cut kept the dollar on the back-foot.

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The offshore yuan rose as high as 6.9951 per dollar on Wednesday, extending a rebound of some 4% from a year-to-date low touched in July. China unleashed a blitz of policy support measures on Tuesday amid concerns over its growth target including plans for a stock stabilization fund.

The currency has been rallying this quarter as expectations that the Fed will further loosen its policy after delivering a half percentage point rate cut kept the dollar near the lowest level since January.

Yuan gains could extend if greenback weakness drives Chinese exporters to repatriate some of their large dollar holdings into the local currency. Capital flows into the country have already improved in August, as local firms registered net sales of foreign exchange at banks for the first time in 14 months.

The need for PBOC support for the currency has also receded. Yuan levels have been converging with the central bank’s daily reference rate in a sign that bearish sentiment toward the currency is ebbing.

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