Pressure mounts on China to allow yuan to appreciate
Calls for China to allow its currency to appreciate against the dollar have seen the yen rise against the dollar and the euro.
This morning the yuan was at 7.975 to the dollar and 10.1225 to the euro, while the yen was at 115.589 to the greenback and at 146.731 to the eurozone currency.
The deputy director with the Economic Forecast Department of the State Information Center, Zhu Baoliang, told the China Securities Journal on Thursday that the best way for China to balance its payments was for the country's leaders to allow the appreciation of the currency.
There is concern that the US may impose trade sanctions on the world's fastest growing economy as some believe it is keeping the value of the yuan artificially low to keep down the costs of exports.
Mr Baoliang recommended that the yuan should be allowed to appreciate at a rate of about five per cent a year.
The Japanese yen rose on the comments as a higher value yuan makes Chinese goods more expensive for importers in other countries relative to Japan's.
As China is Japan's biggest trading partner this makes Japanese goods more attractive to Chinese importers.
The pressure on China to allow its currency to rise came from US senators Charles Schumer and Lindsey Graham who have launched a bill seeking a 27.5 per cent tariff on Chinese exports to the US if the yuan does not rise substantially within six months.