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Yuan in biggest weekly rise since revaluation
(Shenzhen Daily/Agencies)
Updated: 2006-02-13 14:36
The yuan finished Friday at its highest level to the U.S. dollar since its revaluation in July after scoring its biggest weekly gain since then of 0.14 percent, with the central bank tolerating its rise, dealers said.
The yuan closed at 8.0505 per U.S. dollar, up from Thursday's 8.0537. It hit new highs against the dollar on four of the five trading days last week.
"The market saw an ample supply of dollars this week, an indication of strong exports and investment," said a dealer at a domestic commercial bank Friday. "The central bank has allowed the yuan to rise without obvious intervention in the week."
China's heavy trade surpluses and foreign investment have ensured steady dollar flows into the market. The People's Bank of China has been the single biggest buyer of U.S. dollars on the market over past years to curb the yuan's gains.
But the central bank has greatly reduced intervention since the yuan's 2.1 percent revaluation last July, acting a few times when it believed the yuan was rising too steeply.
On Friday, the yuan saw gains throughout the day after the central bank set its daily mid-point against the dollar, around which it is allowed to fluctuate 0.3 percent each day, at a new post-revaluation high of 8.0516. Dealers said they saw signs that the central bank encouraged gains in the yuan last week because it allowed stronger mid-points for the currency.
They forecast the yuan would rise above the next target of 8.05 against the dollar early this week after the currency broke through the key 8.06 level.
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