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November 26, 2007

Chinese yuan continues to appreciate

The currency gained 0.14 percent to 7.3867 against the dollar as of 12:54 p.m. in Shanghai, from yesterday's close of 7.3969, according to the China Foreign Exchange Trade System. The yuan rose 0.1 percent to 10.9836 per euro.

Forwards contracts in the currency show traders are more bullish about yuan gains over the next 12 months, betting on a 9.5 percent appreciation to 6.7485.

China's central bank Governor Zhou Xiaochuan said on Nov. 18 that China would consider widening the currency's trading band ``if necessary,'' though he gave no timeframe and said he's comfortable with current policy.

``The day of reckoning for the yuan is getting closer,'' said Hong Liang, an economist at Goldman Sachs Group Inc. in Hong Kong, who expects the yuan will soon be allowed to trade more freely and predicts it will reach 6.78 per dollar in a year.

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