China's yuan bounced back from its biggest overnight fall since its revaluation to edge up against the dollar on Friday, but trade was directionless ahead of President Hu Jintao's US visit next week, dealers said.
The yuan closed at 8.0180 to the dollar, up from 8.0185 on Thursday, when it fell as much as 0.16 percent.
The Thursday decline marked the first time the yuan had lost more than 0.1 percent overnight since it was revalued by 2.1 percent to 8.11 per dollar in July and freed from a dollar peg to float within managed bands.
"Everybody was expecting the yuan to break through the key 8.0000 level soon before yesterday's slide dampened sentiment," said a Shanghai-based dealer at a European bank.
"Market players are gripped with vigilance amid a lack of obvious signs for faster yuan appreciation, although Hu's visit is already around the corner."
The caution helped to dampen the impact of a slew of fresh reforms announced on Friday, including a relaxation of capital controls and a plan to set up a market for banks to swap the yuan and foreign currencies on April 24, dealers said.
"A major factor will be how the central bank will affect the pace of the yuan's gains," said a dealer at a key state bank. "So we would now rather state the yuan will appreciate in the medium term than forecast it will or won't breach 8.000 next week."
The currency issue is set to top the agenda during Hu's visit as Washington blames its huge deficit with China mainly on an undervalued yuan. Beijing, refuting the charges, has cited reasons such as US curbs on high-tech exports to China.
Still, Beijing announced a slew of new forex reforms on Friday that may permit Hu to tell US President George W. Bush when they meet next Thursday that China has made another notable move towards a market-driven exchange rate.
Among new steps, fund managers may invest individuals' and firms' existing forex holdings in overseas bonds or shares, while insurers will be permitted to invest in foreign fixed-income assets and money market paper - both "within certain quotas".
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