CHINA / National

Yuan rises to new high before Hu's visit
(Xinhua)
Updated: 2006-04-02 10:11

BEIJING, April 1 -- China's currency strengthened on Friday to its highest level against the U.S. dollar since its July 21 revaluation on high market expectations and ahead of a planned visit by Chinese President Hu Jintao to Washington.

The Shanghai-based China Foreign Exchange Trade System reported the daily benchmark, or the central parity rate for the dollar stood at 8.0170 yuan, falling for the first time below 8.02 yuan, a new low over the past 12 years.

The Chinese currency, also known as renminbi or RMB, chalked up the biggest weekly appreciation from last Monday to Friday, and gained more than 3 percent since the July yuan reform.

The market welcomed the news that President Hu Jintao is due to visit the United States and that China's foreign exchange reserves had ballooned up to be the biggest of any country, said Cao Honghui, a finance research fellow with the Chinese Academy of Social Sciences, a high-profile government think-tank.

Hu will pay a state visit to the United States in mid or late April, a trip a Foreign Ministry spokesman said is aimed at enhancing mutual trust and expanding common understanding.

China raised the value of yuan by 2 percent and scrapped its decade-old peg to the U.S. dollar, instead of linking it to a basket of currencies and allowing it to float up or down within a limited range.

But the United States said the rise is too small. American manufactures contend that RMB was undervalued by as much as 40 percent, giving Chinese exporters an "unfair" price advantage and hurting the U.S. labor market.

The U.S. pressure on China's currency issue built up as China's trade surplus with the United States hit a new high in 2005. Statistics provided by China and the United States differ significantly. China said the Sino-U.S. trade hit 212 billion U.S. dollars last year.

Two U.S. senators have said they would delay for six months a vote on a bill punishing China for "restricting its exchange rate," saying they had seen "signs of currency reform" during a recent trip to China.
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