China's yuan rose to the highest since a peg to the dollar was scrapped in
July, as U.S. senators arrived to press the case for a stronger currency.
"The movements are encouraging," Senator Lindsey Graham said after landing in
Beijing. In talks with Chinese officials Tuesday, the Republican from South
Carolina said he wants to "find out why now, why not before, what to expect
later."
Graham and Senator Charles Schumer accuse China of keeping the yuan's
value low to give its exports a competitive advantage.
![US Senator Charles Schumer is seen in this photo taken on February 21, 2006. [Reuters]](xin_3603032008195391361010.jpg)
US Senator Charles Schumer is seen in this
photo taken on February 21, 2006. [Reuters] |
"The
diplomatic atmosphere has played a role as it suits Chinese interests to move a
little quicker," said Simon Flint, head of emerging Asia currency strategy at
Merrill Lynch & Co. "The U.S.-China relationship is at risk of
deterioration."
The yuan, a denomination of China's currency, the renminbi, climbed 0.09
percent to 8.0241 against the dollar as of 5:30 p.m. in Shanghai, according to
data compiled by Bloomberg. It may strengthen beyond 8 to the dollar this month,
Flint said.
Schumer, a Democrat from New York, and Tom Coburn, a Republican from
Oklahoma, are accompanying Graham for the five-day trip to assess China's
exchange-rate policy.
On March 15 the yuan rose 0.12 percent, the biggest gain since the
revaluation. The jump followed Premier Wen Jiabao's comment that the market will
play a greater role in setting exchange rates. China said at the time of the
revaluation last year it would let the yuan move as much as 0.3 percent per day.
'Doing Its Best'
"The focus is going to be on the senators' visit," said Irene Cheung, a
Singapore-based currency strategist at ABN Amro Bank NV. "It's a good
opportunity for China to allow the yuan to appreciate." Cheung forecasts the
yuan will appreciate to 7.65 against the dollar in 12 months.
The government is working to move toward a freely traded currency, Wu
Xiaoling, vice governor of the People's Bank of China, told reporters in Beijing
on March 18.