China's currency, the yuan, has continued its strong ascent in value against the US dollar, as the central bank set the medium parity trading rate at 7:0015 against the greenback on Tuesday.
There only exists a wafer thin distance to reach the benchmark of 7:1 yuan vs dollar ratio.
The People's Bank of China abolished a fixed rate targeting the US dollar in July 2005. Since then, the yuan's value has been determined by the market performance of a basket of major foreign currencies, including the dollar, the euro, and the Japanese yen.
The yuan has gained about 4 percent against the greenback since the beginning of 2008.
US Secretary of Treasury, Henry Paulson, told chinadaily.com.cn in an interview that the Bush administration has taken notice of the rapid rise of the yuan value, a step that has helped US exports to China, one of the world's major growing markets.
Many Chinese economists and policy-makers believe that a strong yuan will help reduce China's massive trade surplus, mop up excessive liquidity on the market, and curb domestic inflation, which rose to an 11-year high of 8.7 percent in February.
The recent quickening appreciation of the yuan seemingly underscores the Chinese government's determination to rein in domestic prices rises. Some said that Beijing has resorted to two-pronged approaches to fight inflation: rapid yuan revaluation and rein-in of liquidity on the money market.
Others say that the latest acceleration in the rise of the yuan might be the beginning of the country's efforts to narrow the trade imbalance while better meeting domestic consumption with more imports.
The yuan advanced 7 percent against the greenback in 2007, twice as fast as in 2006.