Yuan reaches new dollar high
By Feng Jianmin |
August 11, 2011, Thursday
|
Print Edition
Print Edition
CHINA'S currency hit a new record high of 6.4167 against the US dollar yesterday, with the yuan rising the most since November, according the People's Bank of China's official reference rate.
The appreciation follows China's record trade surplus in July and after a statement by the United States Federal Reserve that it would maintain low interest rates until 2013 at least.
The yuan is allowed to trade up to 0.5 percent on either side of the official rate released by China's central bank, and it touched 6.4120 yesterday during over-the-counter trading, the dollar's lowest level since China's revaluation in 1994.
Though the possibility of another round of quantitative easing, or printing money, was not mentioned in the Fed's statement, analysts believe the US will carry on with a relatively loose monetary policy to tackle its debt problems.
"China should definitely increase currency flexibility to ensure an independent monetary policy," said Li Miaoxian, an analyst with BOCOM International. "Serious inflation in China won't allow the government to adopt as easy a monetary stance as the US."
China's currency is around 5 percent stronger against the dollar than at the same time last year, but is weaker against other currencies such as the euro and the pound.
Li said the yuan had weakened by a weighted average of 1.5 percent against a basket of currencies since the beginning of 2011, and the depreciation had not affected China's exports significantly.
"A record surplus in trading allowed further appreciation of the yuan against the US dollar," a Beijing-based trader said. "But the jump in the exchange rate yesterday was larger than expected."
The DBS Bank said yesterday that the yuan would maintain stable appreciation and reach 6.30 against the US dollar by the end of 2011.
The appreciation follows China's record trade surplus in July and after a statement by the United States Federal Reserve that it would maintain low interest rates until 2013 at least.
The yuan is allowed to trade up to 0.5 percent on either side of the official rate released by China's central bank, and it touched 6.4120 yesterday during over-the-counter trading, the dollar's lowest level since China's revaluation in 1994.
Though the possibility of another round of quantitative easing, or printing money, was not mentioned in the Fed's statement, analysts believe the US will carry on with a relatively loose monetary policy to tackle its debt problems.
"China should definitely increase currency flexibility to ensure an independent monetary policy," said Li Miaoxian, an analyst with BOCOM International. "Serious inflation in China won't allow the government to adopt as easy a monetary stance as the US."
China's currency is around 5 percent stronger against the dollar than at the same time last year, but is weaker against other currencies such as the euro and the pound.
Li said the yuan had weakened by a weighted average of 1.5 percent against a basket of currencies since the beginning of 2011, and the depreciation had not affected China's exports significantly.
"A record surplus in trading allowed further appreciation of the yuan against the US dollar," a Beijing-based trader said. "But the jump in the exchange rate yesterday was larger than expected."
The DBS Bank said yesterday that the yuan would maintain stable appreciation and reach 6.30 against the US dollar by the end of 2011.
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