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Friday, April 29, 2011

China's yuan rises past 6.50 against the US dollar

China's currency, the yuan, strengthened past a key level against the US dollar on Friday, as part of wider efforts to contain inflation on the mainland.

The yuan broke past 6.50 against the dollar, a level not seen since 1993.

Traders and currency strategists believe the move is a sign that China's central bank is prepared to allow the currency to appreciate further.

A stronger currency means imported products become cheaper in China.

"The market is very excited," said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB.

"Clearly, the People's Bank of China is pushing for a stronger pace of appreciation."

China's central bank actively guides the level of the yuan, by effectively setting the rate at which it is allowed to trade.

Mr Kowalczyk said the yuan had gained by 0.9% against the dollar so far in April, roughly equivalent to its entire gain in the first three months of 2011. (read more)