China central bank set yuan rate at a new high

China’s central bank set the guiding rate for renminbi at a new high despite global investors pushing the currency downward in an effort to reduce Beijing’s dependence on the US dollar, the Wall Street Journal reported. The People’s Bank of China (PBoC) on Monday fixed the renminbi’s reference rate against the US dollar at 6.3735 with the trading range at 0.5%, the highest since Beijing first removed the currency’s peg to the dollar in 2005. Monday’s move by the PBoC is “a signal to the market that China will keep letting the yuan appreciate despite the risk aversion in the rest of the world. As China continues to focus on fighting inflation, a stronger yuan is a quick way to bring down inflationary pressures ” said Dariusz Kowalczyk, Hong Kong-based senior economist at Credit Agricole CIB. A stronger yuan makes manufacturers in the country less competitive overseas but eases domestic inflation and accelerates the renminbi’s ascension as a global currency.