Yuan wanders outside 0.3% floating band versus dollar
The exchange rate of the US dollar against the yuan opened Friday (October 28) at 8.0850, exceeding the floating band of + 0.3 percent (i.e. 8.0857) set on July 21, 2005.
An official from the People's Bank of
China indicated that the threshold was exceeded because People's Bank Vice Governor Wu Xiaoling's remarks made the night before about the appreciation of the yuan were taken out of context.
A spokesperson from the central bank stressed that Wu's original intention was that the appreciation is a long-term tendency due to the sustainable growth of
China's economy. She did not mean that the yuan would appreciate continuously.
Analysts point out that the weak exchange rate of the US dollar against a majority of currencies in Asia is one of the reasons causing the yuan to appreciate.
The US economic figures released on Thursday were not positive, which caused the exchange rate of US dollar against major currencies to soften. Moreover, the Financial Times reported that US Treasury Secretary John Snow reiterated his hope that
China would perform another revaluation of the yuan prior to President Bush's visit to
China in November.
Market players predict that the next target of the exchange rate of the US dollar against the yuan will be 8.0800.
SteelOrbis Shanghai