The renminbi rose to a new high of 6.7976 to the US dollar on Monday, its first step toward greater flexibility after China’s central bank promised to unshackle the currency’s peg, Wall Street Journal reported. The renminbi was up 0.4% from Friday’s close of 6.8262 – its strongest level against the US dollar since the currency has been regularly traded. The rise reflects strong demand for renminbi, underlying widespread expectations that the currency needs to rise. On Tuesday, the People’s Bank of China set the central parity rate – the center point of the currency’s official trading band – at 6.7980 to the dollar, 0.43% stronger than Monday’s 6.8275, AFP reported. The renminbi’s appreciation could help bolster the credibility of China’s pledge to allow market forces a greater role in setting the renminbi’s value. Still, the PBoC stressed in a weekend statement that the return to what it calls a managed floating exchange rate will mean a gradual rise, and it ruled out a large appreciation. The renminbi’s gains – though extremely small compared to other market standards – helped boost other Asian currencies against the dollar, while stock prices around the world also rose on Monday.
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