Chinaâ€™s yuan valuation broke through an important symbolic barrier against the dollar on Monday after the central bank lowered the mid-point of its currency just under the 8.0 yuan per dollar exchange rate.
The stronger yuan, its target rate set to 7.9982 to start the day, fell as low as 7.9972 on the over-the-counter market.
Since China unpegged the Yuan from the dollar last July 21, it has gained 1.38 percent on the dollar. For more than a decade before that, China had maintained the exchange rate at 8.28. The strength of the currency had prompted international pressure for China to lower its global trade surplus, which grew in 2005 to $101.9 billion.
Last week, officials in the U.S. Treasury Department refused to label China a â€œcurrency manipulator.â€ President George W. Bush has expressed dissatisfaction with the speed of the Yuanâ€™s appreciation.
Chinese officials concerned over currency fluctuations have limited the daily change in the yuanâ€™s value to 0.3 percent, saying that the nationâ€™s financial system is not prepared for large currency fluctuations.
Criticism by many of the nations who trade with China say that the yuan is too weak, giving the export giant an unfair advantage over competitors.