Yuan breaks 7.4 mark against greenback

Updated: 2007-11-23 10:40

China's currency, the yuan, Friday hit a new high against the US dollar for the second consecutive day, smashing the 7.4-yuan mark, according to the Chinese Foreign Exchange Trading System.

The central parity rate of the yuan, also known as Renminbi (RMB), stood at 7.3992 yuan to one US dollar on Friday, gaining 127 basis points from Thursday's reference rate of 7.4119.

It is the 73rd time since the beginning of this year that RMB reached a new high against the US dollar. It climbed 4,095 basis points, or more than 5.35 percent, from 7.8087 yuan to one US dollar posted on the last trading day of 2006.

The accumulative appreciation since July 21, 2005, when China discontinued yuan's peg to the greenback, has been around 9.4 percent.

Last Sunday, China's central bank governor Zhou Xiaochuan said if necessary, the nation will consider widening the yuan's trading band.

But any change in the yuan's floating band will depend on the global economic situation and it's not the only tool the country would use to make its currency more flexible, Zhou said at the Group of 20 meeting in Cape Town, South Africa.

China widened the yuan's daily trading band against the US dollar from plus or minus 0.3 percent to 0.5 percent in May.

However, market observers said some commercial banks are ordered by the central bank to hand in reserve requirements in foreign currencies next week, which will translate into demand for the US dollar. This will somehow help slow down RMB's appreciation against the greenback in the coming few days.

On Friday, the yuan also gained ground against the euro, the British pound and the Japanese yen.

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