China's currency should appreciate 5% against the U.S. dollar this year, adding to its 3.6% rise in the second half of 2010, according to forecasts by unnamed industry sources cited in a state-media report Tuesday.
The forecast, reported by the China Securities Journal, matched an identical prediction last week, attributed to China Construction Bank senior economist Hwa Erh-cheng via a U.S. diplomatic cable released by the WikiLeaks website.
The appreciation tipped in the China Securities Journal also bore a striking resemblance to the currency's situation before the global financial crisis, when many currency experts referred to a 5% annual gain as Beijing's unofficial 'speed limit' for the yuan.
Chinese officials began allowing the yuan to trade more freely against the U.S. dollar on June 19, as part of a shift in policy to allow greater flexibility in the management of its currency and ending a nearly two-year-long de-facto peg to the greenback that was put in place during the global financial crisis.
The yuan hit a fresh record-high against the U.S. dollar Tuesday, according to the official Xinhua news agency, as the greenback sank to 6.6251 yuan.
The move came as the People's Bank of China set the official trading-range mid-point for the currency pair 12 basis points lower than Friday's 6.6227 yuan, effectively representing the strongest dollar value for the Chinese currency since 2005, Xinhua reported.
Yuan futures, meanwhile, showed investors expecting further gains for the yuan, with the Hong Kong-traded one-month non-deliverable forward slipping to 6.5885 yuan on Monday, compared to Friday's spot rate of 6.5897 yuan, according to Bloomberg news.
