Investors push yuan to 18-year high
By Feng Jianmin |
December 31, 2011, Saturday
|
Print Edition
Print Edition
THE yuan rose to an 18-year high yesterday as investors banked on the currency's appreciation after the Chinese central bank set the daily trading band at the strongest level since a dollar peg ended in 2005.
The People's Bank of China set the yuan's central parity rate at 6.3009 against the US dollar yesterday, capping an annual gain of 4.86 percent. That compared to 3 percent advance in 2010.
On the over-the-counter market, the yuan closed at 6.2947, firming above 6.30 for the first time since China allowed the yuan to be traded at the end of 1993. The yuan can trade within a limit of 0.5 percent on each side of the central parity rate.
After a halt in its appreciation between September and November due to an uncertain global economic outlook boosted demand for the US dollar to hedge risks, the yuan began to climb again in December after the PBOC indicated its preference for a rise. The yuan made a monthly gain of 0.8 percent.
The PBOC data showed that for the first time in four years, foreign capital flowed out from the banking system in October and November.
Analysts believed that China will continue to support the yuan's appreciation as the country make efforts to improve its economic structure and accelerate the currency's internationalization.
Foreign ministry spokesman Hong Lei was the latest among Chinese government officials who have pledged to increase flexibility of the yuan to boost domestic consumption and enhance its status as an international currency.
The yuan may appreciate as much as 3 percent against the US dollar next year, China Guangfa Bank Co wrote in a report yesterday, noting that much of the rise will take place after the second quarter when financial woes in Europe may bottom out, boosting the valuation of currencies of emerging markets.
Meanwhile in its semi-annual report to Congress on the currency policies of major trading partners, the US Treasury said on Wednesday that the yuan was still undervalued although it did not label China a currency manipulator.
The People's Bank of China set the yuan's central parity rate at 6.3009 against the US dollar yesterday, capping an annual gain of 4.86 percent. That compared to 3 percent advance in 2010.
On the over-the-counter market, the yuan closed at 6.2947, firming above 6.30 for the first time since China allowed the yuan to be traded at the end of 1993. The yuan can trade within a limit of 0.5 percent on each side of the central parity rate.
After a halt in its appreciation between September and November due to an uncertain global economic outlook boosted demand for the US dollar to hedge risks, the yuan began to climb again in December after the PBOC indicated its preference for a rise. The yuan made a monthly gain of 0.8 percent.
The PBOC data showed that for the first time in four years, foreign capital flowed out from the banking system in October and November.
Analysts believed that China will continue to support the yuan's appreciation as the country make efforts to improve its economic structure and accelerate the currency's internationalization.
Foreign ministry spokesman Hong Lei was the latest among Chinese government officials who have pledged to increase flexibility of the yuan to boost domestic consumption and enhance its status as an international currency.
The yuan may appreciate as much as 3 percent against the US dollar next year, China Guangfa Bank Co wrote in a report yesterday, noting that much of the rise will take place after the second quarter when financial woes in Europe may bottom out, boosting the valuation of currencies of emerging markets.
Meanwhile in its semi-annual report to Congress on the currency policies of major trading partners, the US Treasury said on Wednesday that the yuan was still undervalued although it did not label China a currency manipulator.
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