News / Asia

Chinese Currency Hits Record High Amid Inflation Fears

China's currency rose to record highs on Thursday as the nation's central bank addresses rising inflation and the promise of continued loose money policies in the United States.

China's yuan was trading at less than 6.4 to the dollar for the first time since a landmark re-evaluation 17 years ago. That marks a rise of more than 3 percent since January and almost 7 percent since the government began permitting a gradual rise in the yuan in June 2010.

People's Daily, the flagship newspaper of the ruling Communist Party, said on its website Thursday that the yuan's rise is expected to gain speed as the government tries to fight inflation and avoid a flood of so-called "hot money" from the United States.

The U.S. Federal Reserve announced on Tuesday it will keep interest rates close to zero through the middle of 2013, making cash readily available to investors.

Previous efforts to stimulate the U.S. economy produced a flood of investment money into China, adding to its inflation woes. China reported this week that inflation stands at 6.5 percent, the fastest pace in three years.

A faster rise in the yuan would also help to meet the demands of China's trading partners, who complain that it artificially depresses the value of the currency to keep its export products cheaper in foreign markets. China this week announced its highest monthly trade surplus in two and a half years, fueled by booming exports.

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