September 27th, 2011
Econintersect: The Chinese yuan hit an all-time record value against the dollar Monday (September 26) with a value of 15.69 cents. This was determined by the People’s Bank of China setting the central parity rate for the yuan at 6.3735 against the dollar. The previous banking day (Friday) the value had been 15.66. The value Monday was the highest valuation since the yuan was allowed to be traded in 1994. Politicians in the U.S. have long criticized China, accusing them of manipulating the value of their currency to keep the value low relative to the dollar. This has been in spite of the yuan’s increasing valuation over the years since the dollar peg was removed in 2005. In the U.S. the argument has been that the Yuan should have appreciated faster. Follow up:
Follow up:The recent appreciation negated speculation earlier this year that China might resume a peg to the dollar to prevent further rise in value. This is something that China did during the global economic crisis, from July 2008 until June 2010, a move made to support exporters. According to the Shanghai Daily, economists expect the yuan to rise in value to 15.87 cents (6.30 yuan to the dollar) before the end of 2011. The following graph from Trading Economics.com shows the history of the exchange rate. The two peg periods (flat rate) are very evident.