The yuan is expected to climb this week in anticipation of an
interest rate cut by the United States Federal Reserve, traders
said.
The Chinese currency ended at 7.2730 to the United States dollar
on Friday, down marginally from 7.2725 at the close on Thursday,
when it hit an intraday high of 7.2721, its highest level since the
dollar peg was scrapped. The yuan opened at 7.2996 on Wednesday,
the first trading day of this year.
The People's Bank of China, the central bank, reiterated last
week that it will use a tight monetary policy to prevent inflation
from worsening and an over-heated economic growth. The tight policy
includes more interest rate rises, an increase in banks' reserve
requirement ratio and a more valuable yuan.
With the expectation of more interest rate cuts, more funds may
float into China, especially if the country were to raise its
interest rates.
(Shanghai Daily January 7, 2008)
