The yuan remained relatively stable despite anticipated pressure
from the United States while its Treasury Secretary Henry Paulson
visits Beijing.
The yuan's central parity rate was 7.5737 against the US dollar
yesterday, up slightly from Monday's 7.5824.
During his visit, Paulson was scheduled to meet top Chinese
officials to discuss issues ranging from trade to the opening up of
China's financial sector and yuan flexibility.
Last week, some US lawmakers managed to pass legislation by the
Senate Finance Committee that would allow firms to appeal for
anti-dumping duties against countries with "fundamentally
misaligned" currencies.
Paulson has openly expressed opposition to the Senate's
stance.
"The Senate bill opens a door for the US to exert pressure on
China to revalue its yuan faster," said Chen Xingdong, chief
economist of BNP Paribas Peregrine Securities.
"The US government is in a dilemma."
Currency dealers said the yuan's relative stability this week is
a result of a technical correction after it surged to close at 7.55
yuan against the dollar last Wednesday. They said the yuan's
movement is likely to stall and remain stable in the coming
days.
The US side has pressed China to revalue the yuan, but the
strategy will not work, Chen said.
"The Paulson visit will not achieve much in this respect," he
told China Daily.
China has held steady the yuan's exchange rate reform will go
steadily but not hastily.
"China has its own tempo in revaluing the yuan," said Zhao
Xijun, a researcher with Renmin University of China.
China's goal remains making the yuan more flexible, but under a
controlled and gradual progress, he said.
The US has demanded that the yuan's revaluation must be faster,
but critics have said this could be disastrous to the Chinese
economy.
If the yuan was revalued by a bigger margin, rising costs would
become unaffordable for many sectors, Chen said.
"It will create great uncertainty for the Chinese economy."
(China Daily August 1, 2007)
