BEIJING, April 1 -- China's currency strengthened on Friday to its highest
level against the U.S. dollar since its July 21 revaluation on high market
expectations and ahead of a planned visit by Chinese President Hu Jintao to
Washington.
The Shanghai-based China Foreign Exchange Trade System reported the daily
benchmark, or the central parity rate for the dollar stood at 8.0170 yuan,
falling for the first time below 8.02 yuan, a new low over the past 12 years.
The Chinese currency, also known as renminbi or RMB, chalked up the biggest
weekly appreciation from last Monday to Friday, and gained more than 3 percent
since the July yuan reform.
The market welcomed the news that President Hu Jintao is due to visit the
United States and that China's foreign exchange reserves had ballooned up to be
the biggest of any country, said Cao Honghui, a finance research fellow with the
Chinese Academy of Social Sciences, a high-profile government think-tank.
Hu will pay a state visit to the United States in mid or late April, a trip a
Foreign Ministry spokesman said is aimed at enhancing mutual trust and expanding
common understanding.
China raised the value of yuan by 2 percent and scrapped its decade-old peg
to the U.S. dollar, instead of linking it to a basket of currencies and allowing
it to float up or down within a limited range.
But the United States said the rise is too small. American manufactures
contend that RMB was undervalued by as much as 40 percent, giving Chinese
exporters an "unfair" price advantage and hurting the U.S. labor market.
The U.S. pressure on China's currency issue built up as China's trade surplus
with the United States hit a new high in 2005. Statistics provided by China and
the United States differ significantly. China said the Sino-U.S. trade hit 212
billion U.S. dollars last year.
Two U.S. senators have said they would delay for six months a vote on a bill
punishing China for "restricting its exchange rate," saying they had seen "signs
of currency reform" during a recent trip to China.