China's Yuan Strengthens, to Fight Inflation

On Thursday, the Chinese government backed up its recent words with actions when it allowed the yuan to appreciate against the U.S. dollar at the fastest pace since China ended its peg to the U.S. dollar in mid-2005. Specifically, the Chinese yuan rose 0.37% to a new high of 7.3175 to the dollar ($0.1367), up 13% from a pegged rate of 8.28 ($0.1208) in 2005. Win Thin, the senior currency strategist at Brown Brothers Harriman, called this "a huge move," adding that it was not a "response to outside pressure, but rather to help China's domestic situation and fight inflation."

Thursday's jump in the yuan capped several sessions of previous gains that brought the yuan's monthly gain to 1.1% and its one-year rise to just under 7%. For the fourth straight quarter, the yuan has gained ground, rising 2.6% in this quarter, up sharply from 1.4% in the third quarter, 1.5% in the second quarter and 1.1% in the first quarter...

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by Neil DeFalco |  01/03/08