Wen reiterates yuan's gradual climb

BEIJING, March 1 (Xinhuanet) -- The yuan inched up against the U.S. dollar Monday after Premier Wen Jiabao reiterated the government's commitment to stick to a gradual rise of the currency.

The yuan ended at 6.5716 against the greenback yesterday, up 0.05 percent from Friday's closing of 6.5750, according to China Foreign Exchange Trading System in Shanghai.

The People's Bank of China set the central parity at 6.5752 Monday, slightly up from Friday's 6.5757. The yuan fell in morning trading yesterday before it gained slightly at the close.

Wen reiterated China's gradual policy on exchange rate reform during an online talk with Internet users on Sunday, citing exporters' tolerance, employment and social stability concerns. He also said the yuan's appreciation is in the interests of the Chinese economy and Chinese people.

"From the premier's wording, we see resistance to a faster appreciation of the yuan against the US dollar as we expected about 5 percent annualized," said Chang Jian, a Barclays Capital analyst, adding major risk factors are US dollar directions and inflation.

Wen emphasized that "considering half of China's trade is processing trade, a sharp one-off revaluation will cause a closure of many processing exporting firms and orders going to other countries."

He said many of the workers are migrant farmers who would lose their jobs. In early 2009, more than 20 million rural migrant workers lose their jobs and return home as export demand fell on the global economic crisis.

The yuan has gained more than 25 percent since China dropped its peg to the US dollar in July 2005. It has risen 3.8 percent since the appreciation resumed in June 2010 after being halted by the global financial crisis.

source:Shanghai Daily