Yuan Rises to Highest Since Dollar Peg

The yuan rose to the highest since a dollar link ended in July 2005 as a government report showed producer prices climbed at the fastest pace in three years.
TradingEconomics.com, Bloomberg 3/10/2008 7:31:20 AM

China is facing ``very big pressures'' to curb rising prices, National Bureau of Statistics director Xie Fuzhan said over the weekend in Beijing, where he was attending the annual National People's Congress meeting. Faster currency gains may help quell inflation by lowering the cost of imports.

The yuan rose to 7.1029 per dollar as of 5:30 p.m. in Shanghai, compared with a close of 7.1110 on March 7, according to the China Foreign Exchange Trade System. The yuan has risen 2.8 percent this year after climbing 7 percent in 2007.

Producer prices rose 6.6 percent from a year earlier after gaining 6.1 percent in January, the statistics bureau said today. That lagged behind the 6.9 percent median estimate of 18 economists surveyed by Bloomberg News.

China's trade surplus narrowed 64 percent in February from a year earlier to $8.56 billion, following a 23-percent gain in January. China's export growth may slow this year on a falling U.S. economy and a strengthening yuan.

Yuan Rises to Highest Since Dollar Peg