From the Financial Times (link)
China’s currency crept past 8.00 to the dollar for the first time on Monday, passing what the market had designated a psychological barrier for the renminbi, but still moving too slowly to arrest a surge in money supply and new loans.
The renminbi closed at 7.9984 in the wake of the US decision last week to refrain from naming China a “currency manipulator” and many analysts expect its appreciation to gather pace over coming months.
The renminbi’s rise coincided with the release of a new set of figures underlining the challenge facing Chinese policymakers in bringing growth of money supply and credit back to its own targets.
See “U.S. Welcomes Rise in China Currency” from the Washington Post (link)
The United States, which has been coping with a record-high trade deficit with China, welcomed the rise in that country’s currency.
“Greater flexibility in China’s exchange rate is something we’ve long advocated,” Treasury Department spokesman Tony Fratto said Monday in response to the appreciation in China’s currency, called the yuan or the renminbi.
China’s official exchange rate broke through the psychologically important 8 yuan per U.S. dollar level Monday, its highest level in more than a decade. Traders were hopeful the move may signal Beijing’s willingness to allow its currency to appreciate faster.