The renminbi has strengthened beyond Rmb7 to the dollar for the first time since 1994 as China’s economic growth speeds on under inflationary pressure. The People’s Bank of China, the central bank, fixed the renminbi’s daily mid-point, or reference rate, at a fresh high of Rmb6.9920 per dollar before trading opened in Shanghai. The currency appreciated to Rm6.9910 to the dollar in the first hour of trading, from a close of Rmb7.0017 on Wednesday. This means it has appreciated by more than 4 per cent since the beginning of the year reports the Financial Times.

China faces several sources of pressure to let its currency rise. Inflation is at an 11-year high, economic growth is robust at more than 11 per cent a year and the cost of commodities, which are usually priced in dollars, is surging. The large size of its trade surplus, which may be a symptom of economic overheating, is also attracting attention from foreign governments. Many politicians in United States say the renminbi is undervalued, giving Chinese exporters unfair advantages.

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