Yuan hits 19-year high against US dollar on likely upbeat July data

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August 8, 2013

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Yuan hits 19-year high against US dollar on likely upbeat July data

By Feng Jianmin | August 8, 2013, Thursday |

Print Edition

China’s yuan strengthened to a 19-year record against the US dollar yesterday amid Chinese officials’ pledge to stabilize economic growth.

The yuan closed at 6.1192 per US dollar yesterday, up from Tuesday’s 6.1217, and was the strongest since China unified the official and market exchange rates at the end of 1993.

The previous high was hit on June 3 and May 27 this year, when the Chinese currency reached 6.1210 on both days.

The strengthening on the spot market outpaced the rise of the central parity rate, as the People’s Bank of China set the daily fixing at 6.1726, only 0.04 percent stronger than Tuesday’s 6.1753.

The yuan is allowed to trade at 1 percent on each side of the central parity rate.

Li Youhuan, a professor at Beijing Jiaotong University, said July data may be better than expected as the central government has taken an array of measures, including tax cuts and investment in railways, to boost the economy, reigniting market expectations for a stronger yuan.

But he said the currency’s appreciation will be limited as exporters are still suffering from an economic slowdown.

Traders said the yuan rose faster in late-day trading, indicating the central bank’s intention to support further appreciation of the currency.

China’s exports, factory output and retail sales may have all edged up in July, according to a Reuters poll, showing initial signs of stabilization in the economy as the government takes targeted steps to head off a sharper slowdown.

China should make monetary controls more coordinated and use multiple tools to ensure stable and moderate credit growth, Financial News, published by the central bank, said in a commentary yesterday.

The yuan has gained 1.8 percent so far this year, bucking a weak trend in emerging market currencies. The appreciation has slowed down since June.

A Standard Chartered Bank report yesterday said global yuan activities grew 65 percent year on year in June, indicating ongoing internationalization of the currency despite China’s falling exports and recent liquidity crunch.

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Yuan hits 19-year high against US dollar on likely upbeat July data

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