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No yuan move ahead of US visit

The yuan seems poised to break through 8.0 to the dollar after strengthening slightly, but China has again ruled out any sudden move to make its currency fully convertible days ahead of President Hu Jintao's Washington visit. In a notice on the State Administration of Foreign Exchange website, Deputy Head Li Dongrong reiterated China would move gradually to make the yuan fully convertible. The notice also said China would take steps to prevent inflows of speculative capital, which have put further upward pressure on the yuan and have fueled inflationary pressures. Dong Tao, senior Asia economist for Credit Suisse First Boston, told the Wall Street Journal about US$10 billion of hot money had flowed into China in the first two months of this year in expectation Hu's visit would lead to a breakthrough on the issue. The yuan closed at 8.0084 Wednesday, up 1.2% since it was appreciated 2.1% against the dollar last July. US politicians claim Beijing manipulates its currency to make its exports unfairly cheap.

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