July 3 (Bloomberg) -- The yuan traded near the highest level since a dollar peg was scrapped in July 2005 on speculation China will quicken the currency's appreciation to lower import costs and curb inflation.
China's currency has gained 10.8 percent versus the dollar in the past 12 months, the second-best performer of the 10 most- active currencies in Asia outside Japan, as crude oil prices have more than doubled. China, the world's second-biggest oil consumer, raised gasoline and diesel prices by at least 17 percent from June 20 to help curb energy consumption.
``Soaring oil prices will add further pressure on inflation in China,'' said Shi Lei, a Beijing-based currency analyst at Bank of China Ltd., the country's biggest foreign-exchange trader. ``The central bank has to accelerate yuan gains to slow imported inflation.''
The currency traded at 6.8528 per dollar as of 9:57 a.m. in Shanghai, compared with 6.8530 late yesterday, according to the China Foreign Exchange Trade System.
The People's Bank of China fixed the reference rate for yuan trading at the highest since the peg for a second time this week. It was set at 6.8529 per dollar today. The yuan is allowed to trade by up to 0.5 percent against the dollar either side of the so-called central parity rate.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net.
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