Tags: Yuan Rises to Strongest Since 1993 as China Cuts Import Costs

Yuan Rises to Strongest Since 1993 as China Cuts Import Costs

Thursday, 30 Dec 2010 07:25 AM

China’s yuan rose to its strongest level since the end of 1993 on speculation the central bank will permit more appreciation next year to help curb inflation.

The People’s Bank of China set the reference rate at the highest level since ending a dollar peg in July 2005, after the Financial News cited a central bank official as saying appreciation has helped Chinese companies lower the cost of imported goods and improve competitiveness. The 3.1 percent yuan gain from June 19 to Dec. 29 will lower inflation by about 1.04 percentage points, Sheng Songcheng, head of the PBOC’s statistics and analysis department, said in a speech published by the newspaper.

“Policy makers have recognized the usefulness of appreciation as a tool to ease inflation,” said David Cohen, an economist at Action Economics Ltd. in Singapore. “There will be some pressure from global commodity prices next year as the global recovery continues.”

The yuan climbed 0.31 percent to 6.6008 per dollar as of the 4:30 p.m. close in Shanghai, the biggest gain since Nov. 9, according to the China Foreign Exchange Trade System. It touched 6.6000, the strongest level since China unified official and market exchange rates at the end of 1993. Cohen said the currency will rise 6 percent next year.

Twelve-month non-deliverable forwards climbed 0.29 percent to 6.4587, reflecting bets the currency will strengthen 2.2 percent in a year, according to data compiled by Bloomberg.

The central bank set its daily reference rate at 6.6229 per dollar, compared with 6.6247 yesterday. The yuan is allowed to trade by up to 0.5 percent either side of the so-called central parity rate. The U.S. Dollar Index, a gauge of the greenback’s strength, slid to the lowest in almost two weeks.

China’s consumer prices climbed 5.1 percent from a year earlier in November, the biggest gain in 28 months, the statistics bureau said on Dec. 11. Cohen said inflation will accelerate to 5 percent for the whole of next year.

© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
StreetTalk
China s yuan rose to its strongest level since the end of 1993 on speculation the central bank will permit more appreciation next year to help curb inflation.The People s Bank of China set the reference rate at the highest level since ending a dollar peg in July 2005, after...
Yuan Rises to Strongest Since 1993 as China Cuts Import Costs
328
2010-25-30
Thursday, 30 Dec 2010 07:25 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved