Monday, the People’s Bank of China has set the central parity rate for the yuan at a fresh record high of 6.4988 per dollar ahead of this week’s US-China Strategic and Economic Dialogue in Washington.
The yuan’s parity rate was fixed at 6.5003 per dollar on Friday.
The Chinese central bank sets the central parity rate every morning and allows the currency to fluctuate up to 0.5 percent from that level.
China’s exchange rate policies have been a sore spot in U.S. – China relations for years with Washington accusing Beijing of deliberately undervaluing the dollar to give Chinese companies an unfair trade advantage.
In a quarterly monetary policy report released last week, the People’s Bank of China reaffirmed that the government will keep the yuan’s exchange rate basically stable – a phrase that implies yuan appreciation against the dollar will be gradual and controlled in line with China’s economic conditions.
Meanwhile, U.S. Treasury Secretary Timothy Geithner said last week that China is starting to let the yuan rise more rapidly to curb inflation but needs to move even more swiftly toward a market-driven exchange rate.
The Chinese yuan that rose to a 4-day high of 6.4935 against the U.S. dollar in today’s early Asian trading at 6:15 pm ET has moved off slightly thereafter. As of now, the yuan is worth 6.4962 per dollar. The dollar-yuan pair closed last week’s trading at 6.4943.