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Yuan breaks through key 7.5 level for the first time

"The prospects for achieving sustained, balanced growth in China and in the world economy [would be] much greater if the Chinese increase the pace of appreciation in the short term and implement a fully market-determined currency in the medium term."

Henry Paulson, US Treasury secretary

China's yuan broke through the key 7.5 level to the US dollar for the first time yesterday, although there was little expectation the rise would allay currency concerns in the US.

The central bank set the yuan central parity rate at a record 7.4938 to the US dollar, compared with a midpoint of 7.5010 set on Tuesday.

"Psychologically this has a rather large impact, but technically the impact isn't huge," said Cai Sijuan (蔡思雋), a forex dealer with Guangzhou Commercial Bank.

The yuan broke through the 7.5 level in morning trade after US Treasury Secretary Henry Paulson repeated US calls for China to allow its currency to appreciate at a much faster pace.

"The prospects for achieving sustained, balanced growth in China and in the world economy [would be] much greater if the Chinese increase the pace of appreciation in the short term and implement a fully market-determined currency in the medium term," Paulson said.

Critics in the US and elsewhere say China is keeping its currency artificially weak, giving Chinese exporters an unfair advantage.

Dealers said yesterday they expected the yuan to continue to strengthen against the dollar, but in a slow, controlled manner.
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