Yuan rises to highest level against dollar
By Zhang Fengming |
January 1, 2011, Saturday
|
Print Edition
Print Edition
THE yuan rose to an intraday high of 6.5896 against the US dollar yesterday, the strongest level since China unified the official and market exchange rates at the end of 1993, on speculation of a further climb in the Chinese currency to tame inflation.
The yuan ended at 6.5897 against the greenback yesterday, according to the China Foreign Exchange Trading System. It gained 3.6 percent for 2010.
The People's Bank of China yesterday put the central parity rate at 6.6227, the ninth day of increase. The yuan is allowed to trade within a daily band of 0.5 percent of the central parity rate.
"A faster appreciation of the yuan is widely expected to curb inflation," said Lu Zhengwei, an Industrial Bank senior economist.
A rising yuan will lessen the costs of imports, which helps curb inflation.
"Considering that it takes six to 12 months for the currency to have an effect on inflation, it's reasonable to see a faster appreciation of the currency earlier" rather than later, Lu said.
The Consumer Price Index, the main gauge of inflation, rose 5.1 percent in November, the biggest gain in 28 months. Food prices jumped 11.7 percent, also by the most since July 2008.
Stephen Green, research head at Standard Chartered Bank China, forecast the yuan to rise 6 percent in 2011.
The yuan has gained more than 25 percent since July 2005 when its peg to the US dollar was cut.
The yuan ended at 6.5897 against the greenback yesterday, according to the China Foreign Exchange Trading System. It gained 3.6 percent for 2010.
The People's Bank of China yesterday put the central parity rate at 6.6227, the ninth day of increase. The yuan is allowed to trade within a daily band of 0.5 percent of the central parity rate.
"A faster appreciation of the yuan is widely expected to curb inflation," said Lu Zhengwei, an Industrial Bank senior economist.
A rising yuan will lessen the costs of imports, which helps curb inflation.
"Considering that it takes six to 12 months for the currency to have an effect on inflation, it's reasonable to see a faster appreciation of the currency earlier" rather than later, Lu said.
The Consumer Price Index, the main gauge of inflation, rose 5.1 percent in November, the biggest gain in 28 months. Food prices jumped 11.7 percent, also by the most since July 2008.
Stephen Green, research head at Standard Chartered Bank China, forecast the yuan to rise 6 percent in 2011.
The yuan has gained more than 25 percent since July 2005 when its peg to the US dollar was cut.
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