The Chinese yuan continued its general appreciation trend today and rose against the U.S. dollar and other major currencies as the traders believed that the central bank will continue to use stronger yuan in its anti-inflation policy.
As the inflation soared to 8.1 percent annual rate in the first five months of the year, Chinese Premier Wen Jiabao has already said this month that battling the accelerating inflation is a government’s current main objective. Yuan’s appreciation against the dollar reached 2.1 percent in the past three months.
Market analysts expect China to continue to push forward the yuan’s rate against the U.S. dollar, but they expect the growth to be less straightforward — with more frequent fluctuations of the rate. The average expected rate range by the end of the year is 6.40-6.60 yuan per dollar.
Today USD/CNY pair dropped down from 6.8570 to 6.8464 in Shanghai Forex trading. The daily minimum was at 6.8456 — it’s the lowest level for the currency pair since the end of the yuan’s peg to dollar in 2005.
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