Tue, Aug 07, 2007 - Page 11 News List

Yuan gains on back of researcher's call for speedier gains


The yuan rose for a second day as Fan Jianping (范劍平), a researcher at China's State Information Center, said Beijing should accelerate the pace of currency gains. Bonds fell.

A stronger yuan would raise export prices and help narrow China's record trade surplus, which Xinhua news agency cited Fan as saying on Sunday may grow 5 percent this year.

Export earnings and fund inflows have flooded the financial system with cash, spurring investment and lending.

"The yuan will rise further because of economic reasons as the trade surplus widens," said Guo Zhaoyang (郭兆陽), a foreign-exchange analyst at China Everbright Bank.

"China may let the yuan trade in a bigger range within flexibility that can be controlled," Guo said.

The yuan strengthened 0.09 percent to 7.5610 against the dollar as of 5:30pm in Shanghai, the largest advance since July 23.

The currency, which rose 9.5 percent since the end of a fixed exchange rate in July 2005, may strengthen past 7.4 by the end of this year, Guo said.

China's central bank has been managing its exchange rate against a basket of currencies since the dollar link was dropped. Some US and European lawmakers claim the Asian nation keeps an undervalued yuan to benefit Chinese exporters.

China needs to increase the appreciation range of the yuan and quicken its gains against the euro and other currencies, the Shanghai Securities News reported yesterday, citing Fan.

The State Information Center is an affiliate of the top planning agency, the National Development and Reform Commission.

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