A quick appreciation of the yuan may dampen the holiday spirits of some Chinese exporters as such a move would put additional cost pressure on them, and yet weaken their competitiveness compared to exporters from other economies.
The People's Bank of China set the yuan's central parity rate against the dollar at 6.589 Friday, hitting a new high since the central bank announced de-pegging of the yuan to the dollar in June.
The yuan's value has kept rising over the past week, with its central parity rate against the dollar exceeding 6.6 Thursday for the first time since China resumed yuan reform.
Over the past year, the yuan has appreciated 3 percent against the dollar.
"The yuan is appreciating against the dollar at a faster pace than expected, and certainly has an impact on our business," Chang Jing, a sales manager at CNBM International Co, told the Global Times Sunday.
CNBM International Co is a trading platform of China National Building Materials (CNBM) Group, a State-owned enterprise under the direct supervision of State-owned Assets Supervision and Administration Commission of the State Council.
"We've recently shortened the period of quoted price adjustments from one week to four to five days to better hedge against exchange rate risk," Chang said.
For big firms like CNBM International, rising costs from yuan appreciation are still within acceptable limits, Chang pointed out, while adding that the impact of an appreciating yuan on smaller exporters is huge as they may not be able to fend off rising exporting costs.
"Yuan appreciation has squeezed profits from small- and medium-sized exporters like us," Eva Zhang, a sales manager from a building materials trading company in Zhengzhou, Henan Province, told the Global Times Sunday.
A faster yuan appreciation compared to currencies of other emerging economies weakens Chinese exporters' competitiveness, Zhang said, adding rising labor costs also result in shrinking profit margins.
"Our business is only about even over the past year, and if we could not make a profit this year, the boss might close it down," Zhang said.
Analysts forecast the yuan will appreciate by about 6 percent this year amidst increasing international pressure, and trading at 6.2 against the US dollar by the end of the year, according to Wang Tao, head of China economic research at UBS Securities.
