The yuan reached a 17-year high before Presidents Hu Jintao and Barack Obama meet in Washington today to discuss issues including China’s currency policy.
Treasury Secretary Timothy F. Geithner said yesterday the U.S. will continue to press China to allow more yuan appreciation so companies around the world can compete fairly. The currency rose last week by the most since September, erasing declines earlier in the month, according to the China Foreign Exchange Trade System.
“Markets already anticipated the move to slightly stronger levels ahead of Hu’s visit,” said Patrick Bennett, a Hong Kong-based strategist at Standard Bank Group Ltd. “A lower dollar-yuan may placate some of the U.S. concerns, but China will always move at its own pace. The trend for the yuan is toward strength.”
The yuan reached a high of 6.5817 per dollar today, before closing little changed at 6.5824 in Shanghai, according to the China Foreign Exchange Trade System. Twelve-month non-deliverable forwards dropped 0.12 percent to 6.4570, reflecting bets the currency will gain 1.9 percent in a year.
The People’s Bank of China set the yuan’s daily fixing 0.01 percent stronger at 6.5885 per dollar, the highest level since July 2005. The yuan is allowed to trade by up to 0.5 percent on either side of the so-called central parity rate.
“Clearly the moves in the yuan fixing have accelerated ahead of the U.S. visit,” said Patrick Perret-Green, Singapore-based head of Asian currency strategy at Citigroup Inc. “It would almost be bad manners if it hadn’t.”
The U.S. Treasury chief said Chinese officials should bear in mind that the yuan is a “big issue” in the U.S., and he predicted officials will allow the currency to strengthen.