China’s yuan yesterday hit its highest level since Beijing vowed to loosen its grip on the unit in June, as economic powers gather in Washington to try to head off a damaging global currency war.
The People’s Bank of China set the yuan central parity rate — the middle of the currency’s allowed trading band — at 6.6830 to the US dollar, the strongest since policymakers promised limited exchange rate reform.
The yuan strengthened during trading to close at 6.6706 to the dollar, Dow Jones Newswires reported, taking gains since the summer pledge to 2.3 percent.
The currency can move up or down 0.5 percent from the parity rate on any given trading day.
China has a history of allowing the yuan to strengthen slightly ahead of events at which it expects to come under heightened pressure over the value of the currency, which US and European lawmakers say is grossly undervalued.
Finance ministers and central bankers from 187 countries were slated to convene for an annual meeting of the IMF later yesterday amid warnings that -currency policies could wreck the global recovery.
With the recovery still painfully slow, recent weeks have seen a range of countries from Japan to Colombia intervene to stop their currencies from rising to levels that would make exports prohibitively expensive.
However, the summit is set to be dominated by a long running and increasingly antagonistic dispute between the US and Beijing — whose weak yuan policies are blamed for slowing the global recovery and hurting US jobs.
Beijing has repeatedly rejected these charges, with central bank deputy governor Yi Gang (易綱) saying on Thursday that China was committed to gradual exchange rate reform.
His comments came after Chinese Premier Wen Jiabao (溫家寶) told European leaders this week to back off from demands that Beijing let the currency appreciate at a faster pace.
Wen said a 20-40 percent appreciation in the currency, which some critics are demanding, would make Chinese exporters broke and cause massive job losses and social instability.
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