Wednesday, March 19, 2008

Record High For Yuan Against U.S. Dollar

by Elisha Sanders

Last Wednesday saw the Yuan rise dramatically against the U.S. dollar, following the Federal Reserve announcing their cut of funds rates by .75% in a bid to stabilize the economy.

According to the China Foreign Exchange Trading System, the Renminbi (RMB) hiked up by 222 basis points to reach 7.0648 yuan for one US dollar.

After bing depegged from the U.S. dollar in July 2005, this new movement in the RMB has sent it to a record high, and it has appreciated 3.4% already this year, after 6.9% for the whole of last year.

Analysts have said that the extremely quick jump is due to the current weakened state of the U.S. dollar due to fears of a recession, and China’s quick move to ensure the appreciation would help to dampen inflation rates which have climbed to a 12 year high, at 8.7% for February.

 

 

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