Date: June 12, 2008
Source: China Daily News

BEIJING — China‘s currency, the yuan, Thursday ended a short-lived downward adjustment to break the 6.91 mark, setting a new high against the US dollar since the country depegged its currency from the greenback in July 2005.

On Thursday, the central parity rate of the yuan, or Renminbi (RMB), was set at 6.9015 yuan against the dollar, according to the China Foreign Exchange Trading System. The reference rate was up 194 basis points from the previous trading day level.

The yuan has risen more than 5.5 percent against the US dollar so far this year, in comparison with the 6.9-percent gain last year, and has broken its own record high value 43 times.

Analysts attribute the increase to rising oil prices on the global market after the United States announced a reduction in its crude oil storage, dampening the upward trend of the US dollar and making non-dollar currencies to rebound.

Despite economic slowdown on weaker exports, Chinese authorities would continue to allow gradual appreciation of the yuan against the dollar to  tame inflation, Chu Jianfang, a senior analyst with CITIC Securities said.

According to Customs data released on Wednesday, China‘s monthly trade surplus dropped to 20.2 billion US dollars in May, down 10 percent from the same month last year.

The export growth rate was 0.6 percentage points lower than May last year, whereas the import growth rate was 20.9 percentage points higher.

On Thursday, the RMB lost 200 basis points against the European currency to 10.7225 yuan for one euro and 66 basis points against Japan‘s currency to 6.4485 yuan for 100 Japanese yen.

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