Managed Floating Currency Echange Rates for Yuan
Maintain a Managed Floating Yuan Exchange Rate
The dollar dropped against the euro and yen on Thursday, hit by weak US economic data and a worsening outlook for the world's biggest economy, dealers said.
The euro rose to 1.2803 dollars in morning trading here, up from 1.2736 dollars in New York late on Wednesday.
Against the Japanese currency, the dollar fell to 88.03 yen from 88.37 yen on Wednesday.
Concerns about the US economy grew a day after government data showed retail sales had fallen more than expected in June for a second straight month. Sentiment worsened further after the Federal Reserve revealed minutes from a June meeting of its policy-setting Federal Open Market Committee (FOMC). They showed that board members had cut their growth forecast to 3.0-3.5 percent this year, down from the 3.2-3.7 predicted just months ago and that the Fed was weighing new measures to keep the faltering US recovery on track. "The dovish tone and disappointing advanced retail figures yesterday, 0.5 percent against a forecast of 0.2 percent, has allowed ... the euro to push higher versus the dollar", said Alistair Cotton, a dealer at Currencies Direct. Meanwhile the European single currency "continues its recent strength as the markets wait for results of the stress tests currently being conducted on European banks", he said.
"Several reports of banks passing the tests has been completely ignored by the markets, which wait for the official realise on the 23 of July."
Elsewhere on Thursday, China's central bank said it would maintain a managed floating yuan exchange rate regime and asserted that such a policy was in the nation's long-term interests.
"The regime is essential for economic restructuring and the optimisation of resource allocation," vice governor Hu Xiaolian said in a speech posted on the central bank's website.
The People's Bank of China pledged last month to loosen its grip on the yuan exchange rate and allow the currency to trade more freely against the dollar, albeit within a tight band.
In trading in London, the euro was being quoted at 1.2803 dollars against 1.2736 dollars on Wednesday, at 112.64 yen (112.56), 0.8330 pounds (0.8344) and 1.3404 Swiss francs (1.3418).
The dollar stood at 88.03 yen (88.37) and 1.0475 Swiss francs (1.0535). The pound was at 1.5324 dollars (1.5258).
On the London Bullion Market, the price of gold climbed to 1,214.75 dollars an ounce from 1,207 dollars an ounce on Wednesday.