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People's Daily Online>>China Business

Complex int'l situation weakens RMB vs. dollar

By Wang Yu, Wang Peiwei (Xinhuanet.com)

16:19, December 08, 2011

Edited and translated by People's Daily Online

The RMB traded at nearly 6.3651 per dollar on the spot market on Dec. 6, hitting the weakest value at which the central bank will allow it to trade at against dollar for the fifth straight day, according to statistics from the China Foreign Exchange Trading System.

The central bank only permits the RMB to trade at 0.5 percent above or below the dollar-yuan central parity rate, which is set on a daily basis by the China Foreign Exchange Trading System.

It is distinctly different from the continuous appreciation of the RMB a few years ago and deserves special attention.

"The sharp drop in the value of the RMB has been caused by many complex factors, including changes in short-term demand and long-term capital gains, capital outflows, an expected slowdown in China's economic growth and the short-selling of the RMB by certain financial institutions," said Zhang Monan, an associate research fellow at the State Information Center.

Statistics showed that the U.S. Dollar Index is approaching the 80 mark, compared to 74 in the middle of the year. The strong appreciation of the U.S. dollar has led to the drop in the RMB exchange rate against the dollar. In fact, after the 2008 global financial crisis, the U.S. dollar appreciated sharply in the fourth quarter of that year, while the RMB depreciated to its lower limit for several consecutive days.

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wende at 2011-12-0971.251.41.*
PD should give copies of their newspaper to the Capitol Hill to be read (hopefully by the likes of Sen. Schumer). They hold that RMB values are manipulated. This is a clear sign of RMB being determined by the market.
  

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