The yuan hit an all-time high on Monday during the day’s trading, closing up against the dollar, and traders said it may be on the way to a more than 4% growth rate for 2011.
Spot yuan trading hit an all-time high during Monday trading of 6.3160 against the dollar, before dropping back at market close to 6.3198. Reuters reported that the People’s Bank of China set the dollar/yuan midpoint at 6.3167 on Monday. That is higher than the Friday’s at 6.3209, and comes close to the record of 6.3165 on Nov. 4. It is expected to hold firm or to increase a bit further during this last week of 2011.
The currency is also expected to continue to increase in 2012, because although exports have slowed, China is still recording major trade surpluses. The U.S. pressure on Beijing to allow the currency to rise to help balance trade is expected to have little effect.
However, it is thought that the rate of increase in the yuan will begin to slow in 2012, coming in at around 3% with much of that coming in the second half of the year, with China expected to keep the currency fairly stable during the first half to assess the ongoing impact of the eurozone debt crisis.
A trader at a major Chinese bank in Shanghai was quoted in the report saying, “The PBOC has recently set a slew of strong midpoints and pumped dollars into the market via state banks, giving the market a clear signal that the government won’t let the yuan depreciate.”
He continued, “But the central bank appears not in a hurry to let the yuan appreciate amid global economic uncertainties resulting from the euro zone debt crisis. So the yuan is likely to move largely sideways in coming months.”