Yuan hits new high against US dollar
Updated: 2008-01-11 11:45
China's currency, the yuan, hit a new high against the US dollar on Friday, according to China Foreign Exchange Trade System.
The yuan, also known as the renminbi, reached 7.2672 yuan to one US dollar on Friday, up 133 basis points from the 7.2805 yuan to one dollar on the previous trading day.
This was the fourth time the local currency hit a new record high in the 10 days since the beginning of the new year.
The Chinese currency had appreciated against the greenback by about 12 percent since a new currency regime was imposed in July 2005 to discontinue yuan's peg to the US dollar.
It had climbed 6.9 percent against the dollar last year, but some US critics had said it remained severely undervalued. This gave Chinese exporters an unfair advantage and resulted in the massive trade imbalance between the two countries.
China's trade surplus soared 52.2 percent in the first 11 months of 2007 to $238.13 billion against the same period a year earlier, according to the General Administration of Customs.
The trade surplus is estimated to surpass $260 billion for the whole year, up 47 percent over the previous year. The General Administration of Customs is expected to unveil the annual surplus figure on Friday.
Observers said the yuan's rise would help China reduce its massive trade surplus, mop up excess liquidity and curb inflation.
US Treasury Secretary Henry Paulson recognized last month at the bilateral strategic economic dialogue held in Beijing that "the pace of appreciation has increased over the past year".
China was not against revaluation, but opposed "excessively rapid" appreciation that was inappropriate to its national conditions, Minister of Commerce Chen Deming said last month.
Premier Wen Jiabao said China would improve the yuan's exchange rate mechanism in a controllable and gradual manner, let the market play a bigger role in the mechanism and enhance the currency's flexibility.
He said the exchange rate wasn't the only factor leading to the trade surplus. The appreciation had not forced down Chinese exports because of the world's industrial division of labor and the competitiveness of the country's products.