Central bank gives yuan more latitude
Updated: 2012-04-17 04:27
By Wang Xiaotian in Beijing and Fu Jing in Brussels and Oswald Chen in Hong Kong (China Daily)
|
|||||||||
Currency falls as trading band widened for first time in five years
The yuan dipped against the US dollar on Monday after the central bank doubled the currency's daily trading band but analysts predict an appreciating trend for 2012.
It was the first time since May 2007 that the trading band was widened.
Despite the dip, the yuan will appreciate against the dollar throughout 2012, although at a slower pace and with more volatility, analysts said.
The People's Bank of China, the central bank, announced on Saturday that the yuan would be allowed to fluctuate by 1 percent from a daily midpoint — double the previous 0.5 percent.
The central bank set the exchange rate against the dollar at 6.296 on the first trading day, 0.13 percent lower than on Friday.
But the actual trading rate for the yuan against the greenback depreciated to 6.3150 in Shanghai, according to the China Foreign Exchange Trade System.
It declined as much as 0.46 percent from the reference rate, before narrowing losses later.
In Hong Kong's offshore market, where the currency floats freely, the yuan depreciated to 6.3115 on Monday.
"The depreciation indicates that the one-way street of renminbi strengthening in recent years has probably come to an end," said Duncan Freeman, a researcher from the Brussels Institute of Contemporary Chinese Studies.
The renminbi is more likely to fluctuate around a relatively narrow range in the short term, rather than moving strongly in any one direction, he said.
"If the renminbi exchange rate against the dollar stabilizes or it depreciates, this will have some effect on trade, although the exchange rate is not the most crucial factor," Freeman said.
The renminbi will likely now be "managed without any official bias in the direction of the next big move" in its valuation, said Callum Henderson, global head of FX Research at Standard Chartered Bank.
- Relief reaches isolated village
- Rainfall poses new threats to quake-hit region
- Funerals begin for Boston bombing victims
- Quake takeaway from China's Air Force
- Obama celebrates young inventors at science fair
- Earth Day marked around the world
- Volunteer team helping students find sense of normalcy
- Ethnic groups quick to join rescue efforts
Most Viewed
Editor's Picks
Supplies pour into isolated villages |
All-out efforts to save lives |
American abroad |
Industry savior: Big boys' toys |
New commissioner
|
Liaoning: China's oceangoing giant |
Today's Top News
Health new priority for quake zone
Xi meets US top military officer
Japan's boats driven out of Diaoyu
China mulls online shopping legislation
Bird flu death toll rises to 22
Putin appoints new ambassador to China
Japanese ships blocked from Diaoyu Islands
Inspired by Guan, more Chinese pick up golf
US Weekly
Beyond Yao
|
Money power |