SHANGHAI (Reuters) - China’s central bank guided the yuan past 6.60 per dollar on Thursday, setting the currency’s daily mid-point above that level for the first time, ahead of a visit to the United States by Chinese President Hu Jintao next week.
The yuan’s rise in the last couple of days, on the back of successive record highs in its daily mid-point, reflects a long-held pattern of Beijing allowing appreciation of the currency ahead of big political meetings, where it often faces calls for the yuan to strengthen further.
In the latest such pressure, U.S. Treasury Secretary Timothy Geithner said on Wednesday that China needed to let the yuan strengthen more quickly, a move which could open up long-denied access to U.S. technology.
The People’s Bank of China (PBOC) set the tone for a strong day for the yuan, setting its mid-point versus the dollar at 6.5997, the first time the reference rate from which the yuan may rise or fall 0.5 percent on a given day has been set stronger than 6.60.
The yuan gained to 6.5940 versus the dollar by 0213 GMT, up 3.53 percent since the currency was depegged from the U.S. currency last June.
While the Chinese government generally tries to paint a picture of resisting U.S. pressure for yuan appreciation, in reality it often lets the currency strengthen ahead of major political events in recognition of the importance of the ties between the world’s two biggest economies, forex dealers say.
In the longer term, China is seen allowing the yuan to appreciate 5.4 percent to around 6.3 versus the dollar by the end of this year as part of its efforts to quell inflation, according to a Reuters poll of more than 40 economists and strategists this week.
While the yuan’s gains against the dollar have accelerated since the depegging and especially during the last month, its value against a trade-weighted basket has remained largely stable.
The yuan’s nominal effective exchange rate (NEER) rose 0.72 percent in November, up from a low for the year hit in October, the latest data from the Bank for International Settlement showed.
U.S. President Barack Obama hosts Chinese President Hu for a summit on January 19 that is being billed as the most important state visit in 30 years.
In addition to the Chinese currency, the meeting is expected to touch on other issues affecting the trade relations between the world’s two biggest economies, as well as concerns about stability on the Korean peninsula and other issues.