RMB against dollar falls below 8 yuan at inquiry system

The Chinese currency on Wednesday strengthened to below 8 against the US dollar at inquiry system for the first time since the reform of RMB exchange rate mechanism last July.

RMB against US dollar closed at 7.9970 yuan, up by 59 points over the previous trading day. The peak before than was 8.0005 on June 14.

Market experts said that was a breakthrough for RMB to close below 8 yuan at the inquiry system after hovering near 8 for days recently.

Although on June 14 RMB closed at 7.9996 at bid system, the trading volume at inquiry system is much higher than that at bid system, so the price is representative.

The central parity rate of the Chinese currency on the inter-bank foreign exchange market on Wednesday was 7.9990 yuan against 1 US dollar, up by 46 points over the previous trading day.

On Wednesday, the rate between RMB and US dollor was between 8.0003 and 7.9968, which breaks the record of 7.9970 on June 16 since last July's revaluation of RMB.

The rate closed at 7.9989 at bid system.

Analysts said RMB had traded below 8 several times but dropped again to closed above 8, which may indicate RMB will stand above 8.

The RMB parity rate hit below 8 to 7.9982 per US dollar on May 15 for the first time but closed above 8.00 on that afternoon. On June 15, the yuan rallied to be below 8 again but dropped in the afternoon to 8.0015.

On Wednesday there are five transactions of the forward foreign exchange on the inter-bank foreign exchange market and 188-day traded at 7.8890 yuan and 7.8866 yuan. A total of seven deals of forward foreign exchange was quoted that day.

On overseas NDF market the same day, the discount of one year term RMB against dollor was offered at about 2840 points, a slight increase over the 2800 points on June 20, which shows the market expectation for RMB exchange rate at 7.7130 yuan at a dollar one year later.

By People's Daily Online