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RMB accelerates appreciation pace

(Xinhua)
Updated: 2006-08-08 16:59

The appreciation pace of China's currency of Renminbi is speeding up, with the daily benchmark, or central parity, rising to a new high of 7.9699 against US dollar on Monday.

RMB broke the psychological hurdle of eight yuan to one U.S. dollar in mid-May amid strong market expectations. Previously, it took 49 trading days for the rate to reach 7.99 from 8.0, while only 11 trading days to breach 7.97 from 7.99.

Generally, the RMB has been inching upward since its value was raised 2 percent and it was linked to a basket of foreign currencies in July last year, scrapping its decade-old peg to the U.S. dollar.

The RMB, limited to moving 0.3 percent above or below each day's parity rate against the U.S. dollar, has now risen 1.72 percent during the past year.

Dealers attribute the currency's recent appreciation acceleration to the weak performance of U.S. dollar, caused by the market expectation that the U.S. Federal Reserve may announce to halt interest-rate increases this week.

The United States has been pressuring China for further appreciation due to its huge trade deficit with China. U.S. manufacturers contend that the RMB is undervalued, making U.S. goods more expensive in China and Chinese products cheaper in the United States.