China's currency, the yuan, hit a new high against the U.S.
dollar on Friday, according to China Foreign Exchange Trade
System.
The yuan, also known as the Renminbi, reached 7.2672 yuan to one
U.S. dollar on Friday, up 133 basis points from the 7.2805 yuan to
one dollar on the previous trading day.
This was the fourth time the local currency hit a new record
high in the 10 days since the beginning of the new year.
The Chinese currency had appreciated against the greenback by
about 12 percent since a new currency regime was imposed in July
2005 to discontinue yuan's peg to the U.S. dollar.
It had climbed 6.9 percent against the dollar last year, but
some U.S. critics had said it remained severely undervalued. This
gave Chinese exporters an unfair advantage and resulted in the
massive trade imbalance between the two countries.
China's trade surplus soared 52.2 percent in the first 11 months
of 2007 to 238.13 billion U.S. dollars against the same period a
year earlier, according to the General Administration of
Customs.
The trade surplus is estimated to surpass 260 billion U.S.
dollars for the whole year, up 47 percent over the previous year.
The General Administration of Customs is expected to unveil the
annual surplus figure on Friday.
Observers here said the yuan's rise would help China reduce its
massive trade surplus, mop up excess liquidity and curb
inflation.
U.S. Treasury Secretary Henry Paulson recognized last month at
the bilateral strategic economic dialogue held in Beijing that "the
pace of appreciation has increased over the past year".
China was not against revaluation, but opposed "excessively
rapid" appreciation that was inappropriate to its national
conditions, Minister of Commerce Chen Deming said last month.
Premier Wen Jiabao said China would improve the yuan's exchange
rate mechanism in a controllable and gradual manner, let the market
play a bigger role in the mechanism and enhance the currency's
flexibility.
He said the exchange rate wasn't the only factor leading to the
trade surplus. The appreciation had not forced down Chinese exports
because of the world's industrial division of labor and the
competitiveness of the country's products.
(Xinhua News Agency January 11, 2008)
