From Bloomberg News (link)
The yuan had its biggest gain since last year’s revaluation before President Hu Jintao meets his U.S. counterpart George W. Bush tomorrow, and as currencies China uses to manage its exchange rate rose against the dollar.
Today’s advance, more than this year’s average weekly gain and almost half the maximum China allows each day, suggests the government may widen the band in which the yuan can move, said Thio Chin Loo at BNP Paribas SA. Hu is under pressure to allow faster gains to counter criticism China keeps the currency weak to support exporters and widen its trade surplus with the U.S.
Also see Flexible yuan could help China fight inflation-WTO from Reuters (link)
The World Trade Organisation (WTO) on Wednesday stepped into the international tussle over China’s exchange rate, saying looser controls could help Beijing fight inflation and avoid market distortions.
In a rare foray into currency issues, the Geneva-based trade body warned that if it did nothing, China risked higher inflation, stoked by capital inflows from its huge balance of payments surplus.
