Yuan Climbs As Beijing Eases Grip
Six months after China pledged to increase the flexibility of the yuan exchange rate versus the dollar, there are fresh signs that Beijng is gradually loosening its grip on the currency.</br></br>The yuan rose to its highest level against the dollar in a month on Thursday after the People's Bank of China adjusted its daily target exchange rate upward. Traders took that as a signal that China would allow a faster rate of appreciation in coming weeks as President Hu Jintao prepares for a visit to Washington in mid-January.</br></br>The yuan has risen 2.8% against the dollar since June 19, when China ended its rigid peg to the dollar. However, U.S. producers complain that the yuan remains far undervalued and that by actively intervening to prevent it from rising, China gives its manufacturers an unfair advantage.</br></br>The Treasury has voiced its concerns to Beijing about its policy, but for the most part takes a hands-off approach.</br></br>Supporters of China's approach say that the yuan's current rate of appreciation is more or less in line with that which occurred in the three years before it was fixed during the 2008 crisis, when it gained 20% against the dollar.