The exchange rate of the Chinese yuan to the U.S. dollar reached a 12-year
high to hit 8.0116 on Wednesday, according to Thursday's China Securities News.
The Chinese currency, also known as renminbi or RMB, chalked up its biggest
ever weekly appreciation last week, up more than 3 percent since China's
exchange rate reform last July when the value of the yuan started to be linked
with a basket of currencies rather than being pegged to the U.S. dollar.
The yuan's recent appreciation shows the market welcomes the news that
President Hu Jintao is to visit the United States and that China's foreign
exchange reserves are now the biggest in the world, said Cao Honghui, a finance
research fellow with the Chinese Academy of Social Sciences.
Hu will visit the United States this month, a trip "aimed at enhancing mutual
trust and expanding common understanding", according to a Foreign Ministry
spokesman.
Last July, China raised the value of the yuan by 2 percent and scrapped its
decade-old peg to the U.S. dollar.
But the United States said the rise is too small. American manufacturers
contend that the RMB was undervalued by as much as 40 percent, giving Chinese
exporters an "unfair" price advantage and hurting the U.S. labor market.
U.S. pressure built up as China's trade surplus with the United States hit a
new high in 2005. Statistics provided by China and the United States differ
significantly. China said the Sino-U.S. trade hit 212 billion U.S. dollars last
year.
China's foreign currency reserves are being boosted as the country buys
dollars and other foreign currencies that come into the economy, amid booming
foreign trade, and stockpiles them in U.S. Treasury bonds and other assets as
means of foreign exchange controls and to guard against possible inflation,
analysts say.
Central banker Zhou Xiaochuan said it is "not reliable" to achieve a
Sino-U.S. trade balance only by adjusting exchange rates.
China will not have another one-off revaluation of yuan, said Premier Wen
Jiabao last month.
But the yuan is allowed to move 0.3 percent up or down from the benchmark
value against the dollar per day.