Chinese central bank prevents renminbi strength

Story link: Chinese central bank prevents renminbi strength

The renminbi strengthened just a bit in relation to the dollar on Monday, rising to Rmb8.1097 to the dollar at the close of trade after going up to Rmb8.1089 during the day.

In after hours trading, however, it was back down to Rmb8.1115. This trend signaled that China does not intend to let its currency strengthen much more in the near future, as some investors had hoped.

This was confirmed by a statement from a member of the Chinese central bank’s monetary committee, who said that the renminbi would not become fully convertible for at least five years to guard against speculators.

The yen was one victim of the stability of the renminbi. The Japanese currency lost 0.3 percent more in relation to the US dollar to ¥111.54, and it was down by 0.3 percent against the euro to ¥135.52. The yen also dropped 0.7 percent to sterling, to ¥194.77.

Sterling gained 0.5 percent to $1.7466 in relation to the dollar and was up 0.4 percent against the euro, to £0.6905.

Analysts said that the pound had seen benefit from news related to mergers and acquisitions as Pernod Ricard was rumored to be selling euros to buy sterling in order to pay some shareholders of Allied Domecq, which the French drinks group recently purchased.

Meanwhile, the political scandal in Brazil continued to widen, sending the Brazilian real down 1 percent to R$2.3953 in relation to the US dollar, bringing its total losses in the past three trading sessions to 3.3 percent.

The Egyptian pound stayed at its previous level of E£5.77 against the dollar in spite of the bombings in Egypt over the weekend as analysts said that Egypt’s currency would likely neither weaken nor strengthen substantially in the near future.