Chinese Mandarin - Yuan rises to new high against US Dollar

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Yuan rises to new high against US Dollar

www.chinanews.cn 2006-03-02 09:41:43

(Source: Xinhua)

BEIJING, Mar. 2 - China's currency strengthened to its highest level
against the U.S. dollar on Wednesday since its July 21 revaluation.
The China Foreign Exchange Trade System announced that the central
exchange rate for the dollar was 8.0390 yuan, falling for the first time
below 8.04 yuan.
The Chinese currency, or renminbi, has gained a further 0.87 percent
against the dollar following a 2 percent revaluation.
The People's Bank of China (PBoC), the country's central bank, early this
year began a new policy of calculating the yuan's valueagainst the U.S.
dollar using a weighted average of the prices given by major banks. The
highest and lowest offers are excluded from the calculation.
Giving banks a role in setting the daily exchange rate is seen as a sign
that the central bank is willing to allow market forces a greater role in
daily trading, analysts acknowledge.
The United States still argues the yuan's value is artificially
depressed, giving Chinese exporters an unfair advantage, contributing to
U.S. trade deficits and hurting U.S. labor markets.
Pressure on China built up as China's trade surplus with the United
States hit a new high in 2005. Statistics provided by China and the
United States differ significantly.
China said earlier total trade surplus came to 100 billion U.S. dollars
in 2005 amid increasing trade disputes.
Foreign exchange reserves surged to 818.9 billion dollars by the end of
last year -- second only to Japan -- largely as a result of skewed trade
and foreign exchange management.
The PBoC, however, reiterated in its annual monetary report released last
week that the yuan will remain "basically stable" at a reasonable,
balanced level this year.
The "independent, controllable, progressive" way whereby China reforms
its currency system will continue, it said.
Meanwhile, the central bank said priority will be placed on promoting
balanced international payments.
The bank emphasizes a floating yuan is not simply one that will
appreciate, but the prevailing view among industry watchers is that the
yuan will strengthen gradually in 2006.

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