Markets

China's yuan hits new high against US dollar

(Xinhua)
Updated: 2011-01-19 14:04

BEIJING - The Chinese yuan rose to a record high Wednesday of 6.5885 against the US dollar.

The central parity rate of the Chinese currency, also known as the renminbi (RMB), was a little bit stronger than the previous record of 6.5891 set Tuesday, according to the China Foreign Exchange Trading System.

The yuan appreciated 3.6 percent last year, but accelerating inflation has led some analysts to predict it could rise further against the dollar this year as the central bank attempts to cool price pressures.

Peng Wensheng, an economist with investment bank China International Capital Corporation Limited (CICC) forecast the currency could rise by up to 6 percent this year, referring to yuan's appreciation last year.

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Goldman Sachs said the yuan could rise 6 percent this year and the ANZ Bank forecast it could climb by 5 percent to 6 percent.

The People's Bank of China, the central bank, announced in June last year it would further reform the exchange rate formation mechanism to improve its flexibility.

On China's foreign exchange spot market, the yuan can rise or fall 0.5 percent from the central parity rate each trading day.

The central parity rate of the RMB against the US dollar is based on a weighted average of prices before the opening of the market each business day.