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March 16, 2006
Quietly creeping upwards
The yuan continues to move, though not fast enough for some (Reuters)
SHANGHAI (Reuters) - China's yuan hit its highest level to the dollar on Thursday since its July revaluation, as dealers said market players took advantage of signs of increased tolerance from the central bank for a stronger currency.
The rise came ahead of a key visit to Beijing next week by two U.S. senators who have said they were inclined to proceed with a vote on a bill threatening China with sanctions.
The yuan traded at its post-revaluation high of 8.0348 in early trade, up a marginal 0.04 percent from its close of 8.0377 on Wednesday when the currency scored its biggest one-day gain of 0.12 percent since its revaluation.
The currency has now appreciated a further 0.94 percent since Beijing revalued it by 2.1 percent on July 21 and freed it from a dollar peg to float within managed bands.
...
But dealers said there was no immediate impact from news of the mainland visit by Sen. Charles Schumer, a New York Democrat, and Sen. Lindsey Graham, a South Carolina Republican.
Both senators said they will head to Beijing next week to hear firsthand what China was doing about its currency before making a final decision on a bill threatening the country with a 27.5 percent tariff on its exports to the United States.
I see a photo op coming. In Chinese culture, saving face is very important--as it is in American politics. Wouldn't a bi-partisan trip to China make it easier for the Senate to back down on the tariff issue?
"The market has gotten accustomed to such political talk and is more likely to wait for a concrete outcome from Washington," said a dealer from another foreign bank.
Smart.
Posted by William Polley at March 16, 2006 1:44 AM
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