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RMB made 11-year new high against the dollar
www.chinanews.cn 2005-11-25 14:00:21
Chinanews, Nov. 25 - The recently topical RMB currency made a new record
high on November 24, with one U.S. dollar fetching only 8.0805 RMB,
falling 11 basis points compared to the previous day's 8.0816, not only
achieving a two-day consecutive new high since this year's July 21 RMB
currency regime reform but also reaching a record high for the past 11
years.
Today, only 4 months and 3 days after the Chinese government announced
its RMB currency regime adjustments, traders at China's Industrial and
Commercial Bank said that the principal reason for the RMB's appreciation
was due to the overall decline of the U.S. dollar in overseas markets,
especially the softening of the dollar against the Japanese yen. After
two consecutive days in which the RMB rose against the dollar, there is a
high probability of the RMB to dollar rate hovering around the 8.08
level. This trader also said that the market generally expects the RMB to
appreciate in the near future and quite a few banks have been trading on
the short side of the dollars recently.
But there are traders at foreign banks who believe that since the RMB is
not far from the whole figure of 8.0800, it would not be difficult to
assault that barrier and might happen over the next few days. According
to Hong Kong's media, Industrial and Commercial Bank of China (Asia)
Limited Deputy General Manager Huang Yuanhui believed that next year the
RMB may rise as high as 8.03 against the dollar. But the current RMB NDF
(Non deliverable forward) is only 4% higher in price than the spot rate,
reflecting the consensus that in the near term, the RMB would not
fluctuate too much.
Although different traders have opposing views and analysis, one decision
is unanimous: in the overall trend of appreciating step by step, the RMB
is marching towards a more flexible currency regime increasingly
determined by the market.
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