Yuan Rises Most in Two Weeks; Reserve Plan Sparks Dollar Drop

[Bozita]

Source: Bloomberg

Yuan Rises Most in Two Weeks; Reserve Plan Sparks Dollar Drop

By Belinda Cao


Nov. 8 (Bloomberg) -- The yuan rose the most in almost two weeks against the dollar after China's plans to diversify its $1.43 trillion in foreign-exchange reserves caused the U.S. currency to extend a global slump.

The Chinese yuan climbed to the highest since the central bank ended a decade-long peg and started managing the exchange rate with reference to currencies of major trading partners. It has slumped against the euro and the Australian dollar this year, increasing the cost of importing manufactured goods and commodities and fueling inflation.

``China needn't do much to mitigate the dollar's slump'' against the yuan, said Li Huiyong, an economist at Shenyin Wanguo Research and Consulting Co. in Shanghai. ``Instead, it should take this opportunity to relax the domestic pressure for inflation.''

The yuan climbed 0.28 percent to 7.4211 versus the dollar as of 1:15 p.m. in Shanghai, according to the China Foreign Exchange Trade System. It gained 0.31 percent on Oct. 29. Li said an annual 10 percent gain is acceptable for the economy, and ``no one doubts that the yuan is undervalued.''



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aZvR8mg.NvrM&refer=home

[thecrow]

1. Heckuva job, Smirky