The yuan is likely to keep rising this week as the Chinese government tries to rein in inflation after the country's worst blizzards in five decades have cut power supplies, causing disruptions in production that will drive up consumer prices, analysts have predicted.

 

Beijing-based Bank of China raised its January inflation forecast to eight percent from 7.6 percent earlier this month. Prices rose amid larger seasonal demand for the lunar new year and supply disruption due to the bad weather and snowstorms.

 

Interest rates and foreign exchange rates are two weapons used by governments to fight inflation.

 

Elsewhere, the final communique from the Group of Seven's Tokyo meeting on Saturday said the G7 "encourages" the need for a greater appreciation of the yuan, a slight softening from "stress" in the communique at the last gathering in October.

 

(Shanghai Daily February 13, 2008)