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HONG KONG: China's central bank has surprised the markets by setting the dollar-yuan central parity rate at a record low.
The People's Bank of China set the dollar-yuan central parity rate at a record low of 6.7625 on Friday, causing the yuan to hit a one-month high against the greenback.
Some observers said Beijing may be responding to both international pressure over the yuan's exchange rate and concerns about inflationary pressure at home.
The move came as China booked a sharp drop in its monthly trade surplus for August to US$20 billion as imports jumped 35 per cent on year while exports growth coming in at 34 per cent on year.
The smaller trade surplus was seen as helping to strengthen Beijing's resistance against international pressures for greater appreciation of its currency.
Some analysts said that the narrowing trade surplus are not likely to ease Washington's frustration over the slow pace of yuan appreciation.
Interestingly, China has brought forward the release of more data for August from September 13 to September 11.
This data includes the consumer price index and industrial output.
Observers are speculating that the central bank could be preparing to raise interest rates before the financial markets opens on Monday. - CNA/fa
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