Yuan has biggest gain against dollar
(Bloomberg)
Updated: 2006-04-19 14:52
"Break Eight"
Undersecretary Tim Adams on March 29 said movements have been "severely
constrained" and the yuan "has failed to test the limits of the current, narrow,
intraday trading bands."
China maintains it lets demand and supply determine the exchange rate and
will introduce further measures on the currency according to the country's
needs.
The government will move gradually toward an exchange rate determined largely
by the market, Hu Xiaolian, director of the State Administration of Foreign
Exchange, wrote in an April 16 edition of the Communist Party's Qiushi journal.
Ma Kai, head of China's top planning body, on March 17 said "there has been no
manipulation," as there has been two-way movement in the yuan.
Pressure from the U.S., as well as the dollar's decline against other major
currencies, will still push the yuan higher.
"It's possible that the yuan will break 8 during or shortly after Hu's
visit," said Ben Simpfendorfer, a currency strategist in Hong Kong at Royal Bank
of Scotland.
The People's Bank of China on Aug. 10 said the yen and Korean won, along with
the euro and dollar, are among the main currencies it uses to regulate the value
of the yuan.
China's central bank buys dollars to keep its exchange rate stable, adding to
its foreign-currency reserves and flooding the banking system with yuan. The
reserves totaled $853.6 billion as of Feb. 28, overtaking Japan's as the world's
largest, the Xinhua news agency reported on April 6.
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