The Chinese yuan will likely appreciate at a faster pace this week amid
market speculation of another interest rate rise following acceleration of
economic indicators in May.
Analysts said the stronger economic data will
prompt the central bank to apply further tightening measures to prevent the
world's fourth-largest economy from overheating.
The currency closed at
7.6246 against the United States dollar on Friday, up from 7.6550 a week
earlier. The central bank set the central parity, an indicator of market views
on the yuan's movements, at 7.6238 on Friday. The yuan has appreciated 7.9
percent since the decade-old fixed exchange rate of 8.28 to the US dollar was
abandoned on July 21, 2005.
Premier Wen Jiabao last week signaled the
likelihood of more tightening moves to prevent the economy from
overheating.
Inflation grew 3.4 percent in May, the fastest pace since
February 2005. Industrial output jumped 18.1 percent, the fastest pace in three
months. Exports surged 28.7 percent, raising the monthly trade surplus to
US$22.5 billion, up 73 percent from a year earlier.
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