Yuan hits new intraday high against US dollar
Chinese currency sets another record against US dollar despite tough outlook for exports
The spot rate for the yuan advanced to a new 19-year-high in intraday trading yesterday, but analysts said a significant appreciation was unlikely in the near future.
The yuan closed at 6.2417 to the US dollar in Shanghai, the highest since 1993, when the government unified the official and market exchange rates. Yesterday's close for the first time hit the upper limit of the band permissible for yuan's daily trading.
The People's Bank of China set the reference rate 0.05 per cent higher at 6.3047 per dollar, raising it for the first time in five days after it hit historic highs repeatedly in the past few weeks.
The central bank widened the daily trading band from 0.5 per cent around the reference rate to 1 per cent in April.
Mizuho Securities economist Shen Jianguang said the rise in the yuan came amid anticipation of capital inflows following the United States' third round of quantitative easing (QE3) and would be "short-lived" given the grim export outlook.
The International Institute of Finance estimates that net private capital inflows to the emerging market from QE3 will reach US$1.026 trillion yuan. The yuan has risen about 1.4 per cent against the dollar since last month, but still less than the Russian rouble's 4.8 per cent gain and the Indian rupee's 4.3 per cent increase.