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China's yuan hits highest level in five years

China's yuan exchange rate hit its highest level against the dollar in five years today, after policymakers pledged at the weekend to make the currency more flexible, Dow Jones Newswires reported.

business Updated: Jun 21, 2010 11:58 IST
AFP

China's yuan exchange rate hit its highest level against the dollar in five years on Monday, after policymakers pledged at the weekend to make the currency more flexible, Dow Jones Newswires reported.

The yuan surged to 6.8089 to the dollar on the nation's main foreign exchange trading market, its highest since July 2005.

The People's Bank of China said Saturday it would "strengthen the flexibility" of the yuan exchange rate, which some analysts saw as a sign Beijing was ready to scrap the dollar peg and allow the currency to rise.

However, the bank came out Sunday to douse expectations, saying there would be no "large swings" in the currency and no one-off adjustment.

The central bank on Monday set the central parity rate -- the centre point of the currency's allowed trading band -- at 6.8275 to the dollar, unchanged from Friday, according to a statement on its website.

Despite the appreciation in the exchange rate, the currency was still within the allowed trading range set at between 6.7934 and 6.8616 for Monday.

China -- under mounting pressure to strengthen the currency ahead of the G20 summit in Toronto -- has effectively frozen the yuan at about 6.8 to the dollar since mid-2008 to boost exports during the world financial crisis.

First Published: Jun 21, 2010 11:55 IST