RMB hits new high against US dollar for three consecutive days
17/1/2007 16:03
The value of the Renminbi (RMB) yuan against the US dollar hit a new high
for the third straight day today with a central parity rate of 7.7798 yuan to
the dollar, according to the Chinese Foreign Exchange Trade System.
The
central parity rate was 7.7938 yuan on Monday and 7.7895 yuan on
Tuesday.
Wednesday's exchange rate also marked a new high of 0.99698 yuan to
the Hong Kong dollar.
The value of the Renminbi (RMB) yuan overtook the HK
dollar on Monday for the first time, with a central parity rate of 0.99945 yuan
to one HK dollar. The central parity rate was 0.99886 yuan on Tuesday.
The
central parity rate against the euro hit a new high of 10.054 yuan and the
central parity rate against the British Pound was also a record at 15.2575
yuan.
Insiders have ascribed the continuous appreciation of the RMB to
China's growing trade surplus and foreign exchange reserves.
The country's
trade surplus last year soared 74 percent to a record US$177.47
billion.
China's foreign exchange reserve reached 1.0663 trillion US dollars
at the end of 2006, announced the People's Bank of China on Monday.
The
figure rose 30.22 percent over the end of 2005, exceeding one trillion US
dollars for the first time, according to the central bank.
The RMB has risen
by more than 4.1 percent since China's reform of the exchange rate system in
July 2005, which allowed the yuan to float against the US dollar within a daily
0.3 percent band from the official central parity rate.
The State Information
Center has predicted an appreciation of three to four percent this year, given
the country's trade surplus and foreign exchange reserves are set to go on
rising.
China's excessive trade surplus was detrimental to both domestic
economic development and foreign trade relations, Minister of Commerce Bo Xilai
said in Beijing on Monday.
He said that reducing trade surplus was the "top
priority" of the year's foreign trade development.
Bo said that as China's
economic growth was mainly powered by exports, the government would keep a close
eye on the negative impact of surplus reduction on national economic growth,
especially job losses.
"To minimize the bad impact, effective measures must
be taken to expand domestic consumption," he said.
The fast appreciation of
the RMB might prompt an influx of speculative funds and cause over supply of
liquidity, which could easily lead to heated housing and stock markets, warned
Xu Shaoqiang, vice president of Economics College of Shanghai-based Fudan
University.
Xinhua
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