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Yuan hits new high against US dollar |
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14:24, July 04, 2007 |
The parity rate of the yuan hit a post-revaluation high breaking the psychological barrier of 7.60 against the US dollar yesterday.
Meanwhile, members of the central bank's monetary policy committee at a meeting, reiterated China's stance that it will continue to increase the flexibility of the currency's exchange rate but under the principle of self-initiative, controllability and gradual progress, according to a statement on the website of the People's Bank of China yesterday.
The mid-point rate of the yuan stood at 7.5951 to the dollar yesterday, compared with 7.6075 on Monday, according to the Chinese Foreign Exchange Trading System.
It was the highest mid-point since the yuan was depegged from the US dollar in July 2005.
The currency's relative gain against the US dollar, is due to a large extent, to the latter's recent weakness in the international market, analysts said.
The dollar fell to a 26-year low against the British pound on Monday as the Bank of England is expected to announce an interest rate hike this week.
It also weakened to near its all-time low against the euro, as global interest rate rises have made the currency less attractive.
Analysts also said the market is waiting for release of the country's June macroeconomic figures, which may further push up the yuan's value if they show the economy is continuing to soar.
The National Bureau of Statistics is expected to release the figures in the middle of the month.
However, Li Yongsen, a finance researcher with the Renmin University of China, said the yuan's revaluation has been going on steadily and the macroeconomic figures may not have much impact on the process.
"While it may have some impact on the yuan's value, the basic situation has not changed regarding the yuan's revaluation," he told China Daily.
China's foreign exchange reserves, foreign trade surplus and capital account surplus, plus its strong economic growth, are all putting pressure on the yuan to appreciate, he said.
The expected interest rate hike may also have some impact, he said.
Given the country's rising consumer price index, which hit a record high of 3.4 percent in more than two years in May, and its strong economic expansion, the market has expected the central bank to raise interest rates in the coming months.
The steady rise in the yuan's value, therefore, is not unexpected, Li said.
He said the authorities have taken some measures to relieve the pressure on the yuan's revaluation, such as the expected launch of the State foreign exchange investment company and the new export tax rebate cuts.
"But it will take some time for those measures to take effect," he said.
Source: China Daily
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