China's yuan hits new high against US dollar

[mulligan]

China's yuan hits new high against US dollar

(Reuters)
Updated: 2007-07-16 13:44

BEIJING -- China's currency, the yuan, hit a new high against the U.S. dollar on Monday, according to the Chinese Foreign Exchange Trading System.

The value of the yuan, or RMB, went up 50 basis points from last Friday's 7.5731 against the U.S. dollar to open for trade on Monday at 7.5681, the highest rate since the yuan was revalued by 2.1 percent from 8.28 yuan in July 2005.

It is the 51st time that the yuan's value has hit a record this year, climbing by 2,406 basis points from 7.8087 on the last trading day of 2006.

The United States complained a slow appreciation of Yuan gave Chinese exporters unfair trading advantages.

China's customs authorities said the country's monthly trade surplus hit a new high of 26.91 billion U.S. dollars in June, up 85.5 percent over the same month last year.

This was mainly because domestic companies, whose export tax rebates were cut on July 1, were rushing exports, said Huang Guohua, senior analyst with the General Administration of Customs.

The government announced on June 19 it would cut or eliminate export tax rebates for 2,831 commodities from July 1 in an attempt to "suppress overheated export growth and ease frictions between China and its trade partners".

With June's consumer price index, China's inflation rate, predicted to remain above three percent, the market expectation for an interest rate hike had also pushed up the yuan's value, according to the observers.

The People's Bank of China, the central bank, said in May that it would allow the yuan to fluctuate against the U.S. dollar by 0.5 percent a day, up from 0.3 percent.

On Monday, the central parity rate of RMB against the euro stood at 10.4296, up 54 basis points from Friday level, while yuan's value against the Japanese yen went down 232 basis points to 6.2003 yuan against 100 yen.