29 Jun 2010

China sets yuan rate at 5-year high

2:01 pm on 29 June 2010

China has set the exchange rate for the yuan at its highest level in five years, after previously saying it would make the currency more flexible.

China has come under increasing international pressure to allow the yuan, which is pegged to the US dollar, to appreciate.

The US in particular has argued the weak yuan gives Chinese exporters an unfair competitive advantage, the BBC reports.

China has said it will not be pressured into moves by the international community that do not benefit its economy, and has ruled out a large, one-off move in the yuan's value.

Chinese officials set the rate of exchange between the yuan and the US dollar each working day, allowing it to trade within a narrow band above and below this figure.

On Monday, what the central parity rate was set at 6.789, the highest it has been since China unpegged the yuan in July 2005.

Between 2005 and 2008, China allowed the value of its currency to rise by 21%, before pegging it again to the dollar to help its exporters weather the global financial crisis.