BY KEITH BRADSHER FOR THE NEW YORK TIMES
HONG KONG — China’s currency dropped further in May against the dollar than in any other month since the Chinese government began allowing the renminbi to appreciate gradually in the summer of 2005. The shift could help Chinese exports but worsen trade friction with Europe and particularly the United States.
By setting weaker and weaker daily “fixings” for the renminbi against the dollar at the start of each day’s trading, China’s central bank has pushed down the renminbi 0.9 percent against the dollar over the last month. The decline in the daily fixings coincides with signs that the Chinese domestic economy is slowing sharply this spring and may need help from stronger exports.
A cheaper renminbi makes Chinese exports more competitive in overseas markets while making foreign goods more costly and less affordable in China. The Obama administration has been pressing China for the last three years to allow faster appreciation in the renminbi, not depreciation, as a way to narrow the United States’s trade deficit with China, which reached a record $295.46 billion last year. Full Article