Yuan surpasses new high prior to IMF meeting
The yuan rose to a record high Friday, despite the government's vocal opposition to sharp appreciation.The People's Bank of China, China's central bank, set the yuan's central parity rate at 6.6830 against the dollar Friday, hitting a new high since the country launched currency reforms in July 2005.
The yuan gained in early trade to about 6.6710 against the dollar, Dow Jones Newswires reported, indicating an appreciation of 2.3 percent since the central bank in June announced plans to proceed with foreign exchange reforms. Those reform measures were previously put on hold due to the global financial crisis.
The rising yuan is in line with the government's recent pledges to maintain a more flexible currency.
Yi Gang, vice governor of the People's Bank of China (PBC), speaking Thursday at a seminar prior to the annual meeting of the World Bank Group and the International Monetary Fund, which opens Friday in Washington, said the yuan's value will be kept stable and at a proper and balanced level, Yi said.
The yuan has seen two-way fluctuations since the summer pledge, suggesting the currency regime is trending more stable, said Lian Ping, chief economist with the Bank of Communications.
The yuan has been on the rise in recent weeks, mainly due to accelerating short-term capital inflows since July and the sharply depreciating dollar, Lian said.
The upward movements are likely to continue in the near future, while afterwards, downward changes are also expected, Lian believes.
The yuan's value will edge up in the year to come, but won't rise substantially due to pressure from outside voices, he said.
Some market watchers, however, remain concerned over the currency's stability.
"Official statements vow no drastic changes, while the yuan has actually seen a lot of appreciation in the recent month." said Lu Zhengwei, a Shanghai-based senior economist with the Industrial Bank Co.
The government should make the currency's fluctuations predictable over a certain period of time, helping prepare the market for risk hedging, Lu said.
While the yuan is rising against the dollar, the yuan's real effective exchange rate should be kept stable so as not to impact the country's exports, Lu suggested.
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