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Yuan rises to new high against dollar

By Wang Fei’er  (Global Times)

14:23, October 15, 2012

The Chinese yuan traded at an intraday peak of 6.2654 against the dollar on China's spot currency market Friday, a record high against the greenback according to data provided by the State Administration of Foreign Exchange (SAFE), a development which likely signals the weakening value of the dollar rather than the start of another major round of appreciation by the renminbi, experts told the Global Times Sunday.

Meanwhile, the People's Bank of China (PBC), the country's central bank, set the yuan's midpoint against the dollar at 6.3264 Friday, a three-month high.

The launch of a third round of quantitative easing (QE3) by the US Federal Reserve in mid-September sparked concerns about the interest risks facing dollar-denominated assets in the global financial market, Sheng Hongqing, chief economist for China Everbright Bank, told the Global Times. These concerns dented the dollar's value and created space for the yuan to rise 0.2 percent against the US currency, as it has done since the start of the Fed's QE3, said Sheng.

Last week's rise aside, the yuan is not expected to appreciate as sharply as it did six years ago after central financial authorities introduced foreign exchange reforms, said Sheng, who predicted that the yuan's value to the dollar would plateau at 6.25 by the end of this year.

In 2005, planners in Beijing eased some of their controls on the yuan's price and started pegging the yuan against a basket of foreign currencies rather than the dollar alone, a move aimed at giving the international market more of a say in the worth of Chinese currency. From then until the end last year, the yuan's value increased 23.88 percent, according to data from the SAFE.

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