Yuan breaks record dollar exchange rate

The yuan hit a new high against the US dollar on Monday, breaking records in May for the sixth time since the country launched the yuan exchange rate reform in July 2005.

The People's Bank of China, the country's central bank, set the yuan's central parity rate against the US dollar at 6.1811 on Monday, 56 basis points higher than the previous trading day.

As of Monday the yuan had appreciated 1.72 percent against the dollar since the beginning of the year, following a moderate gain of 1.03 percent throughout 2012.

The strong yuan appreciation has taken a toll on export orders and profits for many manufacturing enterprises, which have already been feeling the pinch due to the rising costs of raw materials and labor, the Beijing News reported Monday, citing unnamed industry sources.

Profit margins in the export-­oriented sectors such as cotton manufacturing, wool manufacturing and clothing making will suffer estimated declines of 3.19 percent, 2.27 percent and 6.18 percent respectively if the yuan gains 1 percent against the dollar, according to the newspaper report.

Yuan appreciation has weighed on exporters' business confidence for the longer term, forcing them to shift to short-term orders instead of longer-term orders, although it does help boost the nation's imports, Shen Danyang, spokesperson for the Ministry of Commerce, said at a news conference on May 16.

In the first four months of the year, 73.4 percent of enterprises surveyed by the ministry predicted no change or even a decline in their export profits for the whole year, the spokesperson said.

Shen stressed that smaller labor-intensive exporters especially are expected to bear the brunt of the yuan appreciation.