Chinese currency hits new high against U.S. dollar



www.chinaview.cn 2008-01-02 12:21:07 Print

BEIJING, Jan. 2 (Xinhua) -- China's currency, the yuan, hit a new
high against the U.S. dollar on Wednesday, breaking the 7.30 mark to
reach a central parity rate of 7.2996 yuan to one dollar.

The yuan, also known as the renminbi, went up 50 basis points from
Friday, the last trading day in 2007.

The Chinese currency had appreciated against the greenback by
about 12 percent since a new currency regime was imposed in July 2005
to revalue and de-peg it from the dollar.

It had climbed 6.9 percent against the dollar in the past year,
but some U.S. critics had said it remained severely undervalued. This
gave Chinese exporters an unfair advantage and resulted in the massive
trade imbalance between the two countries.

China's trade surplus soared 52.2 percent in the first 11 months
of 2007 to 238.13 billion U.S. dollars against the same period a year
earlier, according to the General Administration of Customs.

Guo Tianyong, director of the banking research center at the
Beijing-based Central University of Finance and Economics, said the
yuan's rise would help China reduce its massive trade surplus, mop up
excess liquidity and curb inflation.

U.S. Treasury Secretary Henry Paulson recognized last month at the
bilateral strategic economic dialogue held in Beijing that "the pace
of appreciation has increased over the past year".

"I've talked to the Chinese enough that we've agreed we don't talk
about how fast is fast. We agree with the principle (of
appreciation)."

China was not against revaluation, but opposed "excessively rapid"
appreciation that was inappropriate to its national conditions,
Minister of Commerce Chen Deming said last month.

The biggest monthly rise of the yuan for the whole of 2007 was in
November when the central parity rate averaged 7.4233 yuan to one
dollar, up 779 basis points from the previous month, according to the
Chinese Foreign Exchange Trading System.

The monthly rate in December was 7.3676, up 557 basis points from
November and up 4,562 basis points from the same month a year ago.

Premier Wen Jiabao said China would improve the yuan's exchange
rate mechanism in a controllable and gradual manner, let the market
play a bigger role in the mechanism and enhance the currency's
flexibility.

He said the exchange rate wasn't the only factor leading to the
trade surplus. The appreciation had not forced down Chinese exports
because of the world's industrial division of labor and the
competitiveness of the country's products, he said.


Editor: Yao Siyan
.

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