The Chinese yuan hit historic highs against the US dollar on the inter-bank spot market on Monday, rising to RMB6.2371 per dollar and vindicating widespread expectations of continued gains in the PRC's official currency.
Caixin reports that the Chinese yuan bucked expectations of sustained increase for the period from May to August of this year, sliding from RMB6.2670 to RMB6.3482 against the US dollar for a total decline of roughly 1.3%.
Since October, however, the spot exchange rate for the yuan has continued to rise rapidly, with inter-bank spot market rates reaching record highs.
Wang Mingde, an analyst with Dongxing Securities, say the main factors contributing to the yuan's near-term gains include expectations of improved Q4 data after China's economic growth hits a bottom, and the recent announcement of a third round of quantitative easing by the USA's Federal Reserve, fastening a cap on gains in the dollar.
Fierce campaigning during the US presidential election is also a key factor, with Mitt Romney's promise to label China a currency manipulator if he wins the election putting extra pressure on the China's policy-makers to permit modest gains in the yuan.
A stronger yuan will lend greater impetus to China's overseas buying spree, which saw state-owned companies snatching up overseas miners and resource companies around the globe this year with unprecedented vigor during the first half of 2013.