China sets strong yuan rate at 6.7890 to $1

BEIJING – China set the strongest yuan exchange rate in years on Monday after Beijing came under renewed pressure at the Group of 20 summit over the weekend to let the currency appreciate.

The People’s Bank of China said it set the central parity rate – the center point of the currency’s allowed trading band – at 6.7890 to the dollar, a fraction of a percent stronger than Friday’s 6.7896.

It was the strongest level policymakers have set since China unpegged the currency in July 2005 and moved to a tightly managed floating exchange rate.

At the G20 meeting in Toronto, US President Barack Obama said he expected China to take seriously a promise made a week ago to allow yuan flexibility, which he said has given Beijing a significant trading advantage.

“My expectation is that they’re going to be serious about the policy that they themselves have announced,” Obama said at the end of the summit on Sunday.

Brazilian Finance Minister Guido Mantega also urged China to let the yuan strengthen more quickly in order to level the playing field for world trade.

China’s central bank pledged to let the yuan trade more freely against the dollar but ruled out dramatic moves in the currency or a one-off appreciation.

The action was widely seen as a bid to head off an ugly spat at the G20 meeting following months of intense pressure on Beijing to embrace currency reform as part of efforts to enhance a global economic recovery.

The currency appreciated 0.53 percent against the greenback over the course of last week.

Analysts downplayed the significance of Monday’s move, saying it might temporarily appease critics but did not presage a significant revaluation of the currency.