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Yuan rises to 6.41 per dollar as China pushes back inflows

By Wen Sheng (People's Daily Online)

10:27, August 10, 2011

Beijing --China's central bank seems resolute to appreciate the value of the yuan, or renminbi, against the U.S. dollar to stave off torrents of hot money inflows that are creating inflationary bubbles in the world’s second largest economy.

The People's Bank of China, the central bank, set the official medium trading price at 6.4167 yuan per U.S. dollar on Wednesday, a new high of the Chinese currency against the greenback since Beijing embarked on the yuan’s revaluation in July 2005.

Wednesday's surge marks a hefty rise of 168 basic points from Tuesday's 6.4335 yuan trading a dollar.

Analysts say that Beijing would allow the yuan to rise more rapidly against the greenback in the coming weeks, as the U.S. Federal Reserve has declared it would keep on its extraordinary loose monetary policy – possibly by launching QE3 to buy more U.S. government bonds – in its desperate action to flood American bank system with credit and prevent America from a double-dip recession.

A considerable proportion of U.S. credit has been slipping to China, attracted by China's solid growth and higher interest rates. China’s central bank has amassed a total of more than $3.2 trillion in foreign currency reserves by June this year. The inflows ratchet up China's yuan supply as the central bank has to buy them with local currencies.

China faces rising pressure of inflation as inflation has kept building up this year. It reached a 37-month high of 6.5 percent in July.

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rmb at 2011-08-10206.248.255.*
5.50 rmb 1993, is on its way. Shea Shea
  

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