The yuan closed slightly higher against the dollar on Tuesday, taking its cue from a rebound of the yen on global markets, and dealers said they expected the yuan to move in a narrow range in coming days.
The yuan ended at 8.0029 to the dollar, bouncing back from 8.0060 on Monday when it fell in response to a weakening yen. Excitement caused by the yuan hitting a post-revaluation high of 7.9970 late last week has largely evaporated.
The yen rallied from the previous day's record low against the euro and eight-week troughs versus the dollar on Tuesday after the Bank of Japan gave its strongest indication yet that it would raise interest rates soon.
"Banks have turned their eyes to international markets over the past two days because they now see no major domestic currency policy changes in the short term, despite last week's gains in the yuan," said a dealer at a major Chinese commercial bank.
Dealers said the yuan was likely to move between 7.9980 and 8.0200 this week, depending on the movements of major currencies globally. A Chinese central bank statement issued late on Monday repeated Beijing's standard commitment to keeping the yuan stable.
"The wording of the central bank's statement on Monday has no change at all compared with previous announcements, indicating the central bank has no intention to adjust its currency policies in the near term," said a Shanghai dealer at a foreign bank. The central bank has allowed the yuan to appreciate just 1.34 percent since its 2.1 percent revaluation last July.
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