According to the news release from the China Foreign Exchange Trade Center, on 19 April the RMB’s trading prices against the US dollar in the inter-bank spot foreign exchange market reached 6.2395, which refreshed a record high for the fifth consecutive trading day since the exchange rate reform.
Inflow of international hot money
Since the beginning of this year, the exchange rate of the RMB against the U.S. dollar changed from 6.2298 to 6.1860, meaning a change of more than 400 basic points, while exchange rate appreciation for the whole 2012 was only about 600 points.
The industrial insiders believed that compared to China’s sustained economic recovery, Japan’s and Europe’s continued quantitative easing policy as well as the uncertainty of the U.S. economic recovery had all added pressure to the RMB appreciation.
An official of the Finance Field of the Chinese Academy of Social Sciences pointed out that the recent price levels in China have been relatively stable, the actual level of interest rates is higher than the U.S. treasury yields leading to capital opportunities in China; at the same time, China’s foreign exchange reserves is growing indicating that the external funding inflows has increased, thus the driving force of these factors contributes to the appreciation of the renminbi.
Save up 1,160 yuan in exchanging US $10,000 in a year
RMB exchange rate hit a new high, brought two very different impacts: it is bad news for many export enterprises; but good news to those going to travel abroad such as tourists and students.
Based on April last year, if one needed $ 10,000 he or she had to pay cash 63,194 yuan; But last weekend converting $ 10,000 will only cost 62,034 yuan which means within a year’s time, the costs of conversion dropped by 1,160 yuan or US $185.6 benefiting a lot of Chinese students and tourists.