Foreign Exchange News
- Yuan ends year at post-revaluation high
Date: 2-Jan-2007 Sources: (Shenzhen Daily)
THE yuan closed up against the U.S. dollar Friday and finished 2006 with a full-year gain of 3.4 percent, with traders predicting a slightly faster appreciation of around 5 percent this year.
The yuan ended at 7.8051, near an intra-day high of 7.8030 - the highest level since its July 2005 revaluation - and up from Thursday's close of 7.8141.
The yuan moved sideways for most of December but resumed climbing late last week, which many traders took as a signal that the central bank was prepared to permit slightly bigger gains in 2007.
'The market was encouraged by strong mid-points set by the central bank at the end of this year,'said a dealer at a domestic bank Friday.
'Most of us have raised our forecasts for how much the yuan could appreciate in 2007 because of signs of more willingness on the central bank's side to allow the yuan to rise,'he said.
The central bank unexpectedly set the yuan's mid-point at a record high of 7.8087 Friday morning, up from Thursday's record of 7.8149.
The central bank remains determined not to allow very rapid appreciation of the yuan because that could destabilize the economy and reward currency speculators, analysts said.
But in the middle of 2006, it allowed intra-day trade to become more volatile and appreciation to quicken to an annual pace of over 4 percent, suggesting it would permit a moderately faster yuan rise to help cool the economy.
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