Yuan Climbs to 17-Year High Against the Dollar
For the first time in more than a decade and a half, the yuan has reached beyond 6.4 to the dollar. From Bloomberg:
The yuan strengthened beyond 6.4 per dollar for the first time in 17 years, supported by the Federal Reserve’s pledge to keep interest rates at a record low and signs China will use currency gains to help rein in inflation.
The currency rose the most since November and 12-month non- deliverable forwards climbed to a three-month high after the central bank’s daily fixing had its biggest jump of 2011. Customs bureau data released yesterday showed record exports helped drive the trade surplus to a two-year high in July, while the Fed a day earlier pledged to maintain near-zero interest rates through mid-2013. China’s consumer prices climbed 6.5 percent last month from a year earlier, the fastest pace in three years, official data show.
“The inflation and trade data, together with the Fed’s policy to maintain extremely low interest rates, have fueled faster appreciation,” said Banny Lam, an economist at CCB International Securities in Hong Kong. “Strong economic growth, supported by the latest export figures, also provides investors with confidence to buy the yuan in these turbulent times.”
The yuan rose 0.33 percent to 6.3970 per dollar as of 10:14 a.m. in Shanghai, according to the China Foreign Exchange Trade System. The currency touched 6.3938 earlier, the strongest level since the country unified official and market exchange rates at the end of 1993. The central bank set its reference rate 0.27 percent stronger at 6.3991, the biggest increase since November. The yuan is allowed to trade up to 0.5 percent on either side of the official rate.