Foreign Exchange News
- Yuan hits new high, shrugs off stock drop
Date: 1-Mar-2007 Sources: (Shenzhen Daily)
THE yuan hit a new intraday post-revaluation high against the U.S. dollar yesterday, extending the previous day's gains and shrugging off Tuesday's tumble on stock prices.
While the foreign exchange market was showing no immediate reaction to weakness in the stock index the day before, traders warned that the yuan's appreciation could slow if stocks continued to tumble.
Stocks slumped nearly 9 percent Tuesday, erasing about US$140 billion of value in their biggest one-day fall in a decade, amid fears that authorities would crack down on speculation that drove shares to record highs.
The market surged 130 percent in 2006 alone, making it the world's best-performing major market.
The stock market seemed to have stabilized yesterday, with the benchmark index edging into positive territory after trade began, buoyed by a climb in heavily weighted financial blue chips.
'I was a bit worried about the big slump yesterday as foreign funds could be withdrawn if the bears hang around,'said a trader with a major U.S. bank.
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