China's Yuan Advances to Highest Since Peg

The yuan climbed to the highest since a peg to the dollar was abandoned in 2005 on speculation the central bank will accelerate gains to ease inflation.

Consumer price increases in May slowed to 7.7 percent, a report showed today, as the yuan's appreciation quickened since April, making imports cheaper. Premier Wen Jiabao pledged last month that the government will step up controls on price rises as it seeks to lower inflation without derailing growth.

The currency climbed 0.16 percent to 6.9075 per dollar as of 5:30 p.m. in Shanghai, from 6.9184 yesterday, according to the China Foreign Exchange Trade System. The yuan is allowed to trade by up to 0.5 percent against the dollar either side of a reference rate set at 6.9015 today.

China's export growth unexpectedly accelerated in May, easing concern that a stronger yuan and a slowdown in global demand will hurt domestic expansion. Overseas sales rose 28.1 percent from a year earlier, after gaining 21.9 percent in April, the customs bureau said yesterday. The trade surplus was $20.2 billion, swelling from $16.7 billion in April, according to the report.

China, Bloomberg
6/12/2008 7:36:49 PM