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China Curbs Yuan Gains to Protect Exporters

China is slowing the rally of the yuan to support exporters as weak domestic demand clouds economic growth. Authorities are using trading bands and state bank interventions to limit further currency gains this year.

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FILE PHOTO: A vegetable vendor counts yuan banknotes at a market in Changzhi, Shanxi province June 13, 2010. U.S. lawmakers risk "poisoning the atmosphere" with China through proposed laws aimed at the yuan currency, China's official news agency said on Sunday, calling Congress members "baby kissing" incompetents. The commentary from the state-run Xinhua news agency was Beijing's latest jab at

China is slowing down the yuan's long rally against the USD/CNH and will cap further currency gains this year to support exporters. The intervention risks sparking trade friction with the United States and Germany over an undervalued exchange rate. Policymakers are stepping in as soft domestic demand weighs on economic growth and capital outflows accelerate.
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