BEIJING, Feb. 20 (Xinhua) -- The Chinese currency recorded a new high on Wednesday, with a central parity rate of 7.1452 yuan against one U.S. dollar, the 17th high for the yuan since the beginning of this year.
The yuan, also known as the renminbi, has appreciated more than13 percent since it was de-pegged from the dollar in July 2005. It climbed 6.9 percent against the greenback in 2007 and has already appreciated more than 2 percent so far this year.
Some analysts said that the government wanted to use a gradual appreciation of the yuan to help ease inflation pressure. Zhou Xiaochuan, head of the People's Bank of China (PBOC), the central bank, has said repeatedly in recent months that the yuan rate would gradually reach a "balanced" level and help bring equilibrium to the balance of payments.
Some analysts have forecast that the Chinese currency would appreciate at least 7 percent to 10 percent against the U.S. dollar for the whole of this year.
Ha Jiming, China International Capital Corp. Ltd. chief economist, predicted that the PBOC would step up its use of monetary policies and the currency rate to tackle inflation, adding that the yuan would rise 10 percent in 2008.
It was reported on Tuesday that the consumer price index rose 7.1 percent year-on-year in January, its fastest pace in more than11 years.
Guo Tianyong, director of the banking research center at the Beijing-based Central University of Finance and Economics, said that inflation would not alter the steady rise of yuan appreciation this year.
"In theory, the yuan rise can reduce import costs and ease inflation to some extent. But too quick a rise could trigger a chain reaction like deflation," he said. "Yuan appreciation cannot replace policies like interest rate hikes."
In 2007, the PBOC hiked interest rates half a dozen times and also increased banks' reserve requirement ratios 10 times, followed by another reserve requirement hike last month.
Meanwhile, successive interest rate cuts by the U.S. Federal Reserve to kick start the economy has widened the China-U.S. interest rate spread and helped weaken the U.S. currency further.
Market analysts said that the PBOC now had limited room to raise rates further and had to accelerate the yuan rise to curb inflation.