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 user 2007-12-28 at 12:31:00 pm Views: 41
  • #19261

    Yuan’s record gain against dollar
    yuan has jumped against the dollar in its biggest post-revaluation
    daily rise after the central bank signalled a shift in its policy.The
    yuan gained 0.37%, closing at 7.3175 to the dollar.The Chinese central
    bank encouraged the jump by setting a very strong daily reference rate
    or mid-point of 7.3079.”The extraordinarily strong mid-points seen this
    week are a clear signal of faster appreciation of the yuan in the
    coming year,” said a bank trader.

    Strong reference rates
    July 2005, China freed the yuan from its tight peg to the US dollar, by
    allowing it to float within a narrow 0.15% band either side of a level
    set by a basket of currencies.The central bank’s reference rate defines
    the day’s trading band, which now extends 0.5% on either side of the
    rate.On Monday, the central banks set such a high mid-point that the
    previous trading day’s close was outside the trading band.The central
    bank has been setting the strong reference rates despite the dollar’s
    recent rise in markets around the world.

    Further moves
    November, the central bank said it would use the exchange rate to fight
    inflation, as prices have risen to an 11-year high.One Chinese trader
    said he thought the central bank might make “some big moves soon,
    possibly even a further widening of the yuan’s daily trading band”.At
    the same time, China’s main stock index rose 1.44% on Thursday, driven
    by property and bank shares.Traders say that some investors were buying
    property stocks partly because of the accelerating appreciation of the
    yuan against the dollar, which boosts asset values.