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China's yuan rises to new high against USD
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13:23, March 20, 2008

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China's yuan continued to rise sharply against the U.S. dollar on Thursday in the wake of the big interest rate cut by the Federal Reserve.

The Fed on Tuesday cut the benchmark federal funds rate by 75 basis points to 2.25 percent to ward off recession. The rate has been slashed by 300 basis points since last September.

The central parity rate of the yuan, or Renminbi (RMB), gained another 136 basis points to 7.0512 against the dollar after jumping 222 basis points on Wednesday, according to China Foreign Exchange Trading System.

The rise pushed the RMB to the record high after it was depegged from the U.S. dollar in July 2005. The RMB has appreciated 3.6 percent this year after rising 6.9 percent last year.

The RMB strengthened at a faster pace as investors sold more dollars amid lingering U.S. recession fears and with the widening interest rate difference between the United States and China, analysts said.

It also came on market speculation that China may further raise interest rate to contain inflation that rose by the nearly 12-yearhigh of 8.7 percent in February, they said.

Source: Xinhua

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