Yuan daily drop vs dollar a record
Updated: 2007-12-07 14:43
China's renminbi experienced the largest single-day drop against US dollar yesterday in light of strong overnight performance by the greenback.
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It was largest daily fall since the nation adopted a foreign exchange system reform in July 2005. The previous record tumble was on May 15 this year, when the yuan lost 209 basis points against the dollar.
The Beijing News quoted a bank's foreign exchange trader as saying the drop was not a total surprise since the dollar edged up against major currencies overnight due to strong US economic figures. He anticipated that the volatile appreciation of the yuan will continue.
In a related move, US Treasury Secretary Henry Paulson stressed the currency issue before leading a delegation to Beijing next week for the US-China Strategic Economic Dialogue. While acknowledging China's efforts to reform the foreign exchange system, Paulson noted that the yuan's rise was still not fast enough to reduce China's trade surplus, its internal trade imbalances, or foreign exchange market pressures, according to a report from the Reuters.
According to the State Administration of Foreign Currency, the exchange rate of the yuan against one dollar averaged 7.4233 in November, 779 basis points higher than the previous month. However, data from the Bank of International Settlements shows that the yuan’s real effective exchange rate, taking account of price level differences between major trading partners, dropped for two months in a row.
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