China's Renminbi (RMB) broke the 7.48 mark to reach a new central parity rate of 7.4718 yuan to one US dollar on Monday, according to the Chinese Foreign Exchange Trading System.
The yuan climbed 92 basis points to one dollar, rising a total 3,369 basis points from 7.8087 yuan on the last trading day of 2006.
This was the 65th new high the RMB hit since the beginning of this year, up more than four percent accumulatively.
The accumulative appreciation since July 21, 2005, when China discontinued yuan's peg to the greenback, has exceeded 8.3 percent.
The yuan broke the 7.6 mark against the US dollar on July 3 and smashed the 7.5 mark on October 24, then the 7.49 mark on October 25.
Zhang Shuguang, a researcher with the Unirule Institute of Economics based in Beijing, believed that the Chinese currency will appreciate against the greenback in a slightly quicker pace in the coming weeks. In a longer run, Zhang said, emerging economies in Asia are on an impressive track of development, and on the other hand, the United States, as the world's largest economy and a major development engine, tends to have its growth slow down more or less.
Some economists echoed Zhang's judgement, arguing that the possibility for the US economy to begin ebbing in the coming 12 months has increased from 28 percent to 36 percent.
Under such circumstances, the RMB will most likely to maintain its momentum against the US dollar, they held.
However, some other economists took a prudent attitude.
Tan Yaling, an expert with the Bank of China, said the move towards a more market-valued yuan should be made gradually.
Wu Xiaoling, deputy governor of the central bank, said on October 20 during a visit to Washington that a sudden move to float the yuan would harm China, and ultimately the global economy.
The current mission for the Chinese government was not to control the currency value, but to adjust the economic structure.
Zhuang Jian, senior economist with Asian Development Bank Resident Mission, warned that China had to be aware of the influx of hot money during the continuous appreciation process.
The appreciation of yuan would increase asset values and so give a further boost to the stock market, which already faces excessive liquidity, said Cheng Weiqing, an analyst with the CITIC securities.
At a conference of the People's Bank of China held earlier last week, the central bank said it would strengthen efforts in financial control and improve the valuation mechanism of the RMB exchange rate.
The People's Bank of China on May 21 further widened the floating band of yuan against dollar for daily spot trading on the inter-bank market from 0.3 percent to 0.5 percent.
On Monday, the yuan lost 469 basis points from the previous trading day to reach a central parity rate of 10.7162 yuan against one euro.
Meanwhile, it climbed 81 points from 6.5514 last Friday to 6.5433 yuan against 100 Japanese yen.
(Xinhua News Agency October 29, 2007)
