The yuan hit a record high against the dollar after the enlargement of its band

The central parity rate of the yuan hit a new high against the dollar Monday, the first trading day following the enlargement of the floating band of yuan on the interbank foreign exchange market abroad.

The central parity rate of yuan, also known as Renminbi (RMB), reached Monday 7.6652 per dollar, gaining 152 basis points compared to the reference rate for Friday, which amounted to 7, 6804.

The yuan has climbed of1, 435 basis points since listing recorded 7.8087 yuan per U.S. dollar during the last days of 2006.

Friday, the People’s Bank of China announced to widen the floating band of yuan against the dollar from 0.3% to 0.5% May 21

“This decision will facilitate the exchange of currency on the foreign exchange market, making the yuan more flexible and stronger in cases of corporate failures and financial institutions, and enhancing its competitiveness,” said the central bank .

“floating margin of 0.5% is reasonable insofar as the exchange rate between the dollar and the yen between the euro and the dollar fluctuated mostly within this range” said Lin Chaohui, a researcher with Guotai Junan Securities.

“This greater fluctuation means that the value of the yuan will rely more on market forces. It is a real step in the right direction, “said Zuo Xiaolei, an analyst at Galaxy Securities.

The central parity rate of yuan against the dollar has appreciated 5.5% since July 21, 2005, when China abandoned its currency fixed against the dollar.