China, US start strategic economic dialogue

Updated: 2006-12-14 11:04

Yuan hits record high

China's currency surged to a new record high on Thursday as US and Chinese officials held the first strategic economic dialogue in Beijing, hitting 7.8180 per US dollar in early trading.

The yuan's appreciation against the US dollar has gained momentum in weeks leading up to an inaugural round of "strategic economic talks" involving top members of US President George W. Bush's administration.

The official, or parity rate for the yuan was set at a record high 7.8197. The yuan gained further in early trading, dealers said.

In opening remarks to the trade talks, US Treasury Secretary Henry Paulson said China's currency policies would be among topics tackled in the two days of discussions.

China has pledged to gradually loosen foreign exchange controls and let market forces determine the yuan's value. However, Chinese officials contend that such changes must be gradual to avoid shocks to the country's developing financial institutions.

China revalued the yuan by 2.1 percent, to 8.11 yuan per dollar, in July 2005. Since then, the yuan has gained about 3.6 percent against the dollar.

The yuan's gain early Thursday ran counter to the dollar's overnight recovery against major currencies elsewhere.

The People's Bank of China, the central bank, announces the parity rate -- a weighted average of prices given by market makers, excluding the highest and lowest offers, early each trading morning.

On Wednesday, the dollar was at 7.8248 on the over-the-counter market.


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