Yuan Trades Near 7 Per Dollar


The yuan traded close to 7 per dollar, the highest since a dollar link was scrapped in 2005, on speculation China will quicken its pace of gains to stem inflation at an 11-year high.

The currency has risen 4.3 percent this year, more than half the advance in all of 2007, as China's Premier Wen Jiabao pledged last month to take ``forceful'' steps to damp inflation. Strength in the yuan lowers import prices and may reduce the amount of funds flowing into the economy by pushing up the cost of exports.

The yuan closed at 7.0017 versus the dollar at 5:30 p.m. in Shanghai, compared with 7.0008 yesterday, according to the China Foreign Exchange Trade System. Nizam forecast the yuan will rise to 6.65 by the end of 2008.

The People's Bank of China fixed the reference rate for yuan trading at 7.0025 against the dollar. The central bank calculates a daily rate by taking a weighted average of quotes from commercial banks designated to act as market makers in the currency.

Interbank lending rates rose for the third day this week. The benchmark seven-day repo fixing rose 0.46 percentage point to 3.93 percent from 3.47 percent yesterday, according to the National Interbank Funding Center.


TradingEconomics.com, Bloomberg
4/9/2008 6:36:35 AM