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| Yuan jumps to a new high against US dollar |
| News Archive - Industry Headline - September news | |
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(ShanghaiDaily, Sept 29, 2006) THE Chinese yuan broke through the 7.9 mark against the US dollar yesterday for the first time since regulators dropped the currency's peg to the greenback. Economists and traders said the accelerated appreciation of the national currency won't last long, however, and the yuan's rise will soon return to a more gradual pace. For now, the yuan's upswing will help quiet criticism from other countries that China is keeping its currency undervalued in a move to boost exports. The rise will also help Chinese shoppers buy more when they travel overseas during next week's National Day holiday. The People's Bank of China set the yuan's central parity rate at 7.8998 against the US dollar yesterday, breaking the 7.9 mark for the first time since July 21, 2005, when the yuan's value was shifted to a basket of currencies. The yuan ended at 7.8965 against the US dollar yesterday in Shanghai after touching an intraday high of 7.8954. The currency has gained 4.8 percent since the foreign-exchange mechanism was revised. The central bank bases the central parity rate on average weighted quotes from 10-plus market makers, a mechanism that incorporates market views into the yuan's movement. The currency is allowed to float within a 0.3 percent daily trading band. The rise in value came on heels of news that two US senators may delay their vote on a bill to impose high tariffs on Chinese goods. "The market indicated a stronger yuan was one solution to the issue," said Jin Di, a Bank of China trader in Shanghai. US Treasury Secretary Henry Paulson met earlier this week with Senators Charles Schumer and Lindsey Graham to persuade them to delay a vote on a bill to impose a 27.5 percent duty on Chinese goods to help narrow the US trade deficit. The yuan experienced its biggest weekly gain last week when Paulson, the former Goldman Sachs chief, was in China meeting with top officials and said the two nations had reached consensus on foreign-exchange changes. Jin also noted that the rapid appreciation may not last long as China has long said appreciation will be gradual, despite outside pressure. His view was echoed by Jan Lambregts, head of research for Rabobank in Asia, who forecast a 3 percent appreciation of the yuan this year. Meanwhile, the yuan was set at 1.01426 against the Hong Kong dollar yesterday. With the two currencies nearly equal, Hong Kong goods will be cheaper for the many mainland tourists who will go shopping in the special administration region over the holiday. source:ShanghaiDaily |
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