Yuan at new high against dollar

CHINA'S currency strengthened yesterday to its highest level against the US dollar since its July 21 revaluation.

The China Foreign Exchange Trade System announced that the central parity rate for the dollar was 8.0472 yuan - less than 8.05 yuan for the first time.

The Chinese currency has gained an accumulated 2.77 percent against the dollar from its before-revaluation value.

The People's Bank of China, the country's central bank, early this year began a new policy of calculating the yuan's value against the US dollar using a weighted average of the prices given by major banks. The highest and lowest offers are excluded from the calculation.

Giving banks a role in setting the new daily benchmark, or the central parity rate, is seen as a sign that the central bank is willing to allow market forces a greater role in daily trading, analysts said.

The United States argues that the yuan is artificially low, giving Chinese exporters an unfair advantage, contributing to US trade deficits and hurting US labor markets.

China has said it places priority on promoting balanced international payments this year.

Earlier government figures show China's trade surplus came to US$100 billion last year amid increasing trade disputes.

As a result, China's foreign exchange reserves surged to US$818.9 billion by the end of last year, second only to Japan.

Central bank Governor Zhou Xiaochuan said that the market has a growing role in setting exchange rates.

Recent appreciation is a result of the increasing role of market participants in setting the exchange rate, rather than a shift in government policy, Zhou said on the sidelines of an Asian central bankers conference in Shanghai.