China s yuan in recent weeks has clawed back almost all of theyear s losses against the dollar, in a surge driven by a weakenedU.S. currency and resurgent demand among local businesses.
The strengthening of the yuan -- which reached a seven-monthhigh on Thursday before ending the day at its highest level since April -- could bring furtherheadwinds to Chinese exporters already grappling with weakening global demand for theirproducts.
But it also could help Chinese officials contend with bubbling inflation worries and reduce frictionbetween China and the U.S. ahead of a presidential election in which both candidates havecriticized China.
Indeed, many analysts expect only modest further pressure on the yuan to rise in the comingmonths. China s trade data this year have weakened the argument that the yuan is significantlyundervalued. In a report issued last week, China s foreign-exchange regulator said the yuan sexchange rate has approached fair-market value.
Since late last year, worries over China s economy had led the yuan to weaken modestly againstthe dollar. In late July, it was down as much as 1.6% against the U.S. currency compared with thestart of the year, following nearly two years of steady appreciation. In the past, the yuan had beenviewed as a surefire bet to rise in value. The depreciation has led to waning interest from foreigninvestors for yuan-denominated assets, such as yuan bonds sold in Hong Kong.
But China s central bank, which controls the yuan, has been leading it on a stronger path in recentweeks. Traders said the trend was hastened by weakness in the dollar in reaction to last week sannouncement by U.S. Federal Reserve its latest plan to bolster the economy by buying bonds, aswell as by the European Central Bank s plan to buy debt issued by struggling euro-zone nations.
The yuan on Thursday finished at 6.3038 to the dollar, its strongest level since April 25, and is nowdown just 0.2% this year.人民币周四收于1美元兑6.3038元的水平，为4月25日以来最高，今年以来仅跌了0.2%。
Thursday s gain was helped by initial September data on Chinese manufacturing. While the readingfrom the preliminary HSBC China Manufacturing Purchasing Managers Index drove down stockmarkets in China and other Asian countries, many traders in China said the figures showed themanufacturing sector was stabilizing instead of worsening.
Improved global sentiments toward riskier assets and expectations that things might be bottomingout in China gave the yuan a jolt today, said analyst Perry Kojodjojo at HSBC Holdings PLC inHong Kong.