China yuan hits record high on capital inflows

SHANGHAI (AFP) - The Chinese yuan closed at a record high on Wednesday as authorities continue to nudge the unit higher to encourage capital inflows, analysts said.

The yuan closed at 6.1939 to the US dollar, stronger than the key 6.2 level and its best close since China launched its modern foreign exchange market in 1994, according to the China Foreign Exchange Trade System.

The Chinese currency also touched a record intra-day high of 6.1923 yuan.

China has faced pressure from the United States and other countries to allow the yuan to appreciate, claiming its value is artificially low.

Analysts said a stronger yuan would help attract further inflows of foreign capital, which picked up as China's economy has recovered, prompting authorities to keep the value high.

"Authorities have been worrying about capital inflows and outflows, fearing overseas capital that flew in earlier on optimism over the Chinese economy might leave the country," said Ms Jiang Shu, an analyst at Industrial Bank.

"In the near term the currency may continue to appreciate," he added.

Recent data has indicated the pick-up in the world's second biggest economy remains fragile. China recorded a rare trade deficit of US$880 million (S$1 billion) in March, figures showed on Wednesday.

The US Treasury last November stopped short of labelling China a currency manipulator, noting gains in the value of the yuan, but said the currency remains "significantly undervalued".