s, feeding concerns that although consumer inflation eased to 7.7 percent in May, down from 8.5 percent the previous month, it may rebound in the coming months.
The central bank yesterday set the mid-point of the yuan's exchange rate at 6.8823 against the dollar, marking a new historical high since China revalued the yuan by 2.1 percent to 8.11 per dollar in July, 2005. It has appreciated a further 17.84 percent since then.
The yuan has regained momentum of fast appreciation while it is strengthening in the non-deliverable forwards market.
Analysts said the yuan's strengthening would reduce pressure on China's "imported inflation", or inflation incurred by imports, but the effect has proved to be limited. Worse, it has started to push some domestic export-oriented enterprises to the wall.
The appreciation momentum of the yuan may not slow until the Olympic Games in August, said Liu Dongliang, currency analyst of the Shenzhen-based China Merchants Bank. "The post-Olympic trend is not clear yet."
Zhou also said China will learn from the US financial woes triggered by its subprime problems.
Sovereign wealth fund
Finance Minister Xie Xuren, who was also attending the SED session, said the country's overseas investment through its $200 billion sovereign wealth fund does not pose a threat to financial markets.
Xie said that the fund is not aimed at s
