China's Renminbi rises to new heights against US dollar
Beijing-China (Nov 15) The reference rate of the renminbi against the US dollar reached a new high on Nov. 14 as the progressive withdrawal of the US quantitative easing program was deferred. The exchange rate against the US dollar stood at 6.0920 on Thursday, and the market is waiting in anticipation to see whether the US dollar will fall below 6 by the end of this year.
The yuan appreciated by nearly 2.5% this year, which is higher than the 1.03% it held throughout last year.
The testimony of Janet Yellen, who was nominated as the next Federal Reserve chairman by US President Barack Obama, was revealed earlier than expected, which lowered the market's expectation of the withdrawal of the quantitative easing program. The US Dollar Index declined to 81.1406 as of 4:43pm on Nov. 14, Taipei time.
The reference rate by People's Bank of China was 6.1315 on Nov. 14, rising for three consecutive trading days. This figure was also a new high against the US dollar after China's exchange rate reform took effect.
A representative from the Huiyin Group said economic figures such as the unemployment rate were weaker than expected, which is likely to delay the progress of the withdrawal of the quantitative easing program. As a result, the market's uncertainty toward the withdrawal of the program weakened the US dollar and strengthened the yuan.
The exchange rate of the renminbi against the US dollar has fluctuated at around 6.09, indicating that the market holds a positive outlook for the appreciation of the Chinese currency.
With the upcoming Christmas holiday, the reference rate of the renminbi is likely to hit new highs due to the widening demand for foreign exchange settlement among exporters, noted the Huiyin spokesperson.
Some market observers held a positive attitude toward the appreciation of the renminbi, with the US dollar falling below 6. However, a professor at Fudan University said the goal can only be achieved if the renminbi appreciates by 2% during the remaining year, so the chance is small.