China lets its currency rise to new high against the dollar -- but slowly
China’s currency inched up to a new high against the dollar on Wednesday, the seventh straight session of gains, as President Hu Jintao arrived in Washington for meetings with President Obama.
The yuan’s recent strength obviously isn’t a coincidence: Facing continuing U.S. complaints that the yuan is too weak -- giving China an advantage in keeping its exports low-priced -- the backdrop of an appreciating currency amounts to a goodwill gesture from the Chinese leadership.
The yuan rose to 6.583 per dollar, an increase of less than 0.1% from 6.588 on Tuesday but still the strongest level it has reached since China began to revalue the currency in mid-2005.
The yuan now has risen 3.3% since Sept. 1, when it stood at 6.811 per dollar.
In remarks at the White House on Wednesday, Obama reiterated the U.S. policy stance, which is that there “needs to be further adjustment in the exchange rate” of the yuan. “We’ll continue to look for the value of China’s currency to be increasingly driven by the market,” Obama said.
China held the yuan at about 8.3 per dollar until mid-2005, then allowed it to strengthen gradually for three years. That ended in mid-2008 with the yuan at about 6.83 per dollar.
The government held the currency steady from mid-2008 to June 2010, when it again loosened controls and allow the yuan to rise further, to the current 6.583 per dollar.
All told, the yuan is about 21% stronger than it was in mid-2008. But China’s trading partners, particularly the U.S., want the Chinese leadership to let the currency rise further -- which would make foreign goods cheaper for the Chinese to buy while potentially making Chinese exports more expensive in other countries.
But China continues to demonstrate that it will adjust the yuan on its own timetable, not Washington’s. "They're in no rush," said Kathy Lien, head of currency research at GFT Forex in New York.
-- Tom Petruno