The renminbi yesterday reached a post-revaluation
high against the US dollar, closing at 7.9587 and breaking the record set
a day earlier.
The reference rate of the renminbi, or yuan, was fixed at 7.9598
against the greenback yesterday. The rate is set by the central bank each
day as the central parity for foreign exchange trade.
The closing price was also the lowest since China allowed the renminbi
to appreciate by 2 per cent against the US dollar to 8.11 last July, and
linked the currency to a basket of currencies instead of the greenback alone.
On May 15, the reference rate fell below 8 to 7.9982 for the first time
in 12 years.
Traders have high expectations of further appreciation of the renminbi,
said Ma Qing, an analyst with CITIC Securities.
Ma said there is still room for the yuan to climb during the rest of
the year, probably reaching 7.8 against the US dollar a view that many
analysts share.
The expectation of a stronger yuan has pulled in more international
capital over the past year, as reflected in the increasing keenness of
qualified foreign institutional investors (QFIIs) to invest in the
country.
By the end of July, China had approved 45 QFIIs with total investment
quota of US$7.5 billion and they have already remitted capital worth 55.1 billion
yuan (US$6.9 billion), according to official figures.
More QFIIs are expected to enter the country with the authorities
recently lowering the entry threshold and relaxing controls over
management of investment quotas and trading accounts.
Overseas financial institutions such as HSBC and Goldman Sachs expect
the central bank to take further steps for greater flexibility of the
exchange rate during the rest of the year.
Also, senior US officials have recently been pushing for greater
appreciation of the renminbi to reduce their country's trade deficit with
China.
By Sun Min (China Daily)
(Agencies)
