Chinese yuan hits new high to U.S. dollar

By Kim Young-gyo
HONG KONG, Aug. 8 (Yonhap) -- The Chinese yuan surged to its highest level against the U.S. dollar on Monday following the recent decision by the global rating appraiser Standard and Poor's Ratings Service (S&P) to downgrade the U.S. government's long-term debt.
Global credit rating agency Standard and Poor's downgraded its U.S. credit rating to AA+ from AAA on Friday, a move that has pummeled the value of the U.S. currency.
According to the central People's Bank of China, the yuan's central parity rate was set at 6.4305 against the greenback, the highest since July 21, 2005, when China abandoned a decade-old peg against the greenback and shifted to a managed floating exchange rate.
The rate hit its previous record high of 6.4404 on Friday.
The New York-based S&P said that it lowered the U.S. rating in the absence of a credible plan by the U.S. Congress and the Obama administration to lower the deficit, even though the nation's US$14.3 trillion debt limit was raised.
The move marks the first time that the United States sovereign rating has fallen from the "AAA" level since 1941.
Experts have been warning that a downgrade in the U.S. sovereign rating could raise the cost of auto loans, home mortgages and other forms of lending in the United States, which can affect the overall economic growth of the world's largest economy.
S&P said earlier on Monday that there is no immediate impact on Asia-Pacific sovereign ratings resulting from the lowering of the issuer credit ratings on the U.S.
It warned, however, that the U.S. rating change, together with the weakening sovereign creditworthiness in Europe, does point to an increasingly uncertain and challenging environment ahead.
"The potential longer-term consequences of a weaker financing environment, slower growth, and higher risk aversion are negative factors for Asia-Pacific sovereign ratings," it said.
ygkim@yna.co.kr