While all eyes are focused on the budget and debt ceiling debacle in Washington DC, The People’s Bank of China on Monday allowed the yuan midpoint, the rate from which the trading rate is allowed to diverge by 1 percent in either direction –to rise to 6.1406 to the U.S. dollar. That was the highest since China created a domestic foreign exchange market in 1994.
The high water mark was stronger than the previous record of 6.1415 on October 8. Intraday on Monday, the dollar/yuan rate went to 6.1073.
Chinese exports have been disappointing of late, at least for China, and some are saying the strengthening yuan is damaging China’s competitiveness. For now, that does not seem to be worrying the PBOC.