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Analysts expect yuan to increase

(Shanghai Daily)
Updated: 2007-03-19 10:54

The yuan may maintain its upward momentum this week amid optimism about possible changes in the trading system.

Analysts said the yuan will likely rise a little in the following five days as bullish sentiment continues.

The Chinese currency closed at 7.7360 against the United States dollar on Friday, up from 7.7445 the week before. The yuan has appreciated 6.6 percent since July 2005, when the central bank abandoned the decade-long peg of 8.28 to the US dollar and weighed it against a basket of currencies.

Analysts expect the yuan to rally for the rest of the year as China struggles to rein in a huge trade surplus.

Central bank Governor Zhou Xiaochuan said during the National People's Congress early this month that a wider trading band for the yuan may be on the horizon.

China allows a daily 0.3 percent fluctuation in the yuan based on a central parity rate. The central bank calculates the rate based on average weighted quotes from 10-plus commercial banks.