China Sets Record High Exchange Rate for Yuan

Oct. 30, 2006 - The official opening exchange rate for the Chinese yuan was set at a record high against the U.S. dollar on Monday, while a top official pledged more progress on loosening currency controls, the Associated Press has reported.

According to an AP news report, the central bank's parity rate for the yuan was set at 7.8781 yuan per U.S. dollar on Monday. The yuan closed Friday at 7.8896 in the over-the-counter market, its highest level since the current exchange rate system was set up in July 2005.

Meanwhile, Vice Premier Zeng Peiyan said China plans to push forward with reforms of the exchange rate system, which limits trading in the yuan and confines its movements to a narrow range.

Zeng, in remarks seen Monday on the Web site of the State Council, or Cabinet, reiterated China's pledges to try to curb its mounting trade surplus.

The daily parity rate is a weighted average of prices given by market makers, excluding the highest and lowest offers.

China allows the dollar-yuan rate to move no more than 0.3 percent above or below the daily parity rate each day, with other currency pairs the yuan's values against the Japanese yen, Hong Kong dollar, euro and British pound allowed to move within 3 percent of the parity rate each day.

SOURCE: Associated Press

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