The yuan ended at a record high against the dollar on Monday after the People’s Bank of China set a new peak for the mid-point for the third straight session, suggesting another leg of appreciation is under way. “It’s certain that the central bank wants to start a new leg of appreciation,” said a dealer at a Chinese bank in Shanghai. “Although a weaker dollar would put upward pressure on the yuan, the central bank wants to follow through given the economic situation.” Dealers expected the central bank could let the yuan rise to around 6.45 per dollar in this round of appreciation as a stronger currency offsets imported inflation. Before trading began, the PBOC set the yuan’s daily mid-point at a record high of 6.4856 against the dollar, from Friday’s 6.4898. The central bank uses the mid-point to guide the currency. Spot yuan hit a fresh closing high at 6.4829 versus the dollar compared with Friday’s close of 6.4917. The Chinese currency has now appreciated 5.30 percent since it was depegged from the dollar in June 2010, and 1.62 percent since the start of this year. Policymakers in Beijing have made it increasingly clear that they are willing to use the currency as one way of fighting inflation, which eased a touch to 5.3 percent in the year to April from a 32-month high of 5.4 percent in March.
