SHANGHAI: The yuan rose versus the dollar on Tuesday after the People's Bank of China set a record high mid-point ahead of a US congressional hearing on Chinese trade practices.
A senior Republican lawmaker announced last week the hearing on trade practices he said were hurting American businesses and workers, but stopped short of promising action on Senate currency legislation to deal with the concerns.
"The government will inevitably be wary of this," said a trader at a Chinese commercial bank in Shanghai. "We expect the central bank could still let the fixing hover around a high level before the US makes a decision."
US lawmakers critical of China's trade policies will use the hearing on Tuesday to press the White House to lay out a strategy to confront Beijing, even as Republicans resist a bill to punish the world's second largest economy for its currency practices. The hearing comes two weeks after the Senate passed legislation to push China to let the yuan rise in value.
But spot yuan failed to hit a record high on Tuesday as investors still believe that China has no intention of pushing up the Chinese currency without international pressure as domestic economic growth slows.
Spot yuan rose to 6.3622 versus the dollar, up from Monday's close of 6.3754. It has risen 3.58 per cent so far this year and 7.29 per cent since it was depegged from the dollar in June 2010.
Before trading began, the PBOC set the mid-point of the day at 6.3425, stronger than Monday's 6.3549. The central bank uses the fixing to signal the government's intentions for the yuan.
