December 27, The Chinese currency renminbi strengthened 15 basis points to 6.3152 against the U.S. dollar on Tuesday, the highest since 1994, according to the China Foreign Exchange Trading System.
Based on a weighted average of prices, the People’s Bank of China, or central bank, sets the central parity rate of the renminbi against the U.S. dollar before the opening of the market each business day.s
“The central parity price is the intention of the central bank. And a higher price shows the central bank’s determination to maintain the appreciation of the Chinese currency. The market has fully received the signal,” a trader told the National Business Daily.
“In view of market trade, profit taking and settlement has pushed up the renminbi. Banks are selling U.S. dollar positions and enterprises are increasing settlements due to accounting needs,” the trader said.
UBS Securities expects the renminbi to stabilize at around 6.35 against the green back at the end of this year and rise by 3% to 6.15 at of the end of 2012.
JP Morgan Chase reckoned China’s real GDP growth would rise 8.2% at an annualized rate in 2012 and the current account surplus would account for 2.8% of GDP next year. The Chinese currency would continue to appreciate by about 4% against the U.S. dollar in 2012.