Skyrocketing Yuan Hits Benchmark

Chinese currency's strengthening against the dollar could boost US inflation
By Harry Kimball,  Newser Staff
Posted Apr 10, 2008 2:34 PM CDT
A currency exchange sign hangs on a street in Hong Kong.    (AP Photo/Kin Cheung)
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(Newser) – For the first time since China unpegged its currency from America’s in 2005, a dollar bought less than 7 yuan at closing today in Beijing, the New York Times reports. Western countries protested for years the yuan was undervalued; its meteoric rise means Chinese goods are getting more expensive in the US—raising inflation fears.

When China ended the peg, in July 2005, a dollar bought about 8.3 yuan; as the government has allowed the currency to appreciate more freely, it has gained 16% on the dollar, including more than 4% this year alone. Analysts (and even the US Treasury Secretary) applauded the development, which one said could help “rebalance the global economy.”