Small gains versus dollar

By Ding Yining | May 25, 2009, Monday |

Print Edition

THE yuan is likely to make small gains against the greenback as United States dollar assets become less attractive.

The Chinese currency edged up against the US dollar in the past week and ended at 6.8239 on Friday, according to the China Foreign Exchange Trade System. The yuan ended at 6.8247 by the end of the previous week.

The near-zero borrowing costs of the dollar will make US assets less attractive and this will boost the yuan. The Federal Reserve is likely to keep key interest rates near zero for some time in a US economy that is pulling out of a steep decline and set for a very gradual recovery.

"The dollar has become very fragile since most capital may find a better place (to invest) with the gradual recovery in the (US) economy," said a research report by RBS Securities Inc.

"The recent economic numbers from the US may hint at signs of recovery but in the long run the dollar won't stay very strong," said Chen Jia, an analyst with Agricultural Bank of China.

Economy

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Small gains versus dollar

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