Chinese Yuan Closes Below 7 per Dollar

The Chinese yuan ended the domestic OTC trading session today below 7 yuan per U.S. dollar level — for the first time since the end of the peg to dollar in 2005.

After USD/CNY closed at 7.0016 yesterday, the exchange rate of the Chinese currency went up today and traded in the 6.9930-6.9907 boundaries on the OTC Forex market.

Since November 2007, China’s government is working to appreciate the yuan to keep down the rising national inflation.

The People’s Bank of China set the central parity rate for the yuan at 6.9920 today against 7.0025 yesterday.

That means a major break through the important psychological barrier for the dollar-yuan rate, which can open a way for the further possible depreciation of the U.S. dollar versus the Chinese currency. And the lower USD/CNY rate is very important not only to the U.S. exporting companies, but for the general health of the U.S. economy that can benefit from the lower international trade balance deficit.