China's yuan trades at 6.49 per dollar, on Fed ambiguity

10:46, April 29, 2011      

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China's currency, the yuan or RMB, strengthened beyond 6.5 yuan per U.S. dollar, as the latter is weakened on the global monetary market because of the ballooning American national debts.

The U.S. Federal Reserve's latest monetary policy conference's ambiguity on whether to launch "quantitative easing III" in July by printing more dollars to buy U.S. Treasury bonds, has send the greenback on a continuous run in value against other major currencies.

Correspondingly, the People's Bank of China, the central bank, decided to set the medium dollar-yuan rate at 6.4990 per dollar on Friday, the highest level since 1993. The yuan also gained in value against the Hong Kong dollar and the Japanese yen.

China's currency has been on a gaining streak this week as market analysts gauged the Federal Reserve policy meeting that signaled the U.S. central bank probably would maintain its unprecedented practice of gushing huge liquidity to "stimulate" an anemic economic recovery.

The Fed's decision to hold the benchmark interests rates at near-zero for an unspecified time has put the dollar in a weak position.

Chinese market analysts believe that the yuan will continue to appreciate against the dollar, probably rising more than 5 percent within 12 months. It has gained more than 2 percent in 2011.

China's central bankers, including Mr Zhou Xiaochuan, governor of the central bank, have said that the country could allow faster currency appreciation to help contain imported inflation. China's consumer price index, a major gauge of inflation, jumped to 5.4 percent in April, hitting a 32-month high.

The central bank has twice raised the interest rates this year to fight inflation. It is expected to continue the monetary tightening policy till the year end.

By People's Daily Online
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