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People's Daily Online>>China Business

Yuan touches low end of range

(Shanghai Daily)

11:05, December 06, 2011

The yuan hit the low end of its permitted trading range against the US dollar for the fourth day yesterday as China's economic slowdown and weakening exports weighed on the currency.

It ended at 6.3641 to the dollar yesterday, from 6.3597 last Friday. The yuan traded between 6.3596 and 6.3666 yesterday, the upper limit of its daily trading band.

The yuan is allowed to fluctuate to 0.5 percent against the dollar on either side of the reference rate.

Speculation that China will curb the yuan's gains to boost exports sent investors chasing the US dollar as a safe haven.

The HSBC Business Activity Index, a gauge of the service sector in China, fell from October's 54.1 to 52.5 in November, well below the index's average of 56.9.

A similar index from the China Federation of Logistics and Purchasing, which was released on Saturday, showed that activities of services enterprises contracted.

Analysts said the weak data suggest China may temporarily hold off a yuan appreciation to create more room for economic growth.

With the recent weakness of the yuan, former central bank adviser Yu Yongding wrote in a commentary published in China Business News yesterday urging the authorities to stall the internationalization of the yuan.

Tommy Ong, senior vice president of treasury and markets at DBS Hong Kong, said the yuan will rise gradually by 3 to 4 percent annually in the next three years.

The Shanghai Securities News said yesterday the yuan is set to rise from 2011 to 2015, citing Yang Tao, a researcher with the Chinese Academy of Social Sciences.


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