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Inflation Pushes Yuan to Highest Rate

March 20, 2008 at 11:44 by Andriy Moraru

Chinese yuanThe Chinese yuan rose to the highest rate against the U.S. dollar since the end of the yuan’s peg to dollar in 2005 as the government is believed to start fighting the domestic inflation rate more devotedly.

Yuan has already gained more than 3.4% since the beginning of the year, and, according to the yesterday’s report by the People’s Bank of China, the dollar is expected to depreciate further during the first half of 2008.

China’s Premier Wen Jiabao pledged this week to take more serious actions in order to tame the rising consumer price inflation that is now reaching its record pace in more than a decade. Many analysts note that the China’s government clearly states now that it will use currency exchange rate as one of the tools to control the inflation.

Today yuan’s rate was set at 7.0512 per dollar; that’s almost 0.2% stronger than the yesterday’s 7.0648 per dollar rate. At a current appreciation speed yuan can reach 7 per dollar rate by the first week of April.

If you have any questions, comments, or opinions regarding the Chinese Yuan, feel free to post them using the commentary form below.

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