China's yuan weakened slightly against the dollar on Thursday as the US currency staged a rebound against most global currencies after solid November job data in the United States.
The yuan, which ended weaker in the previous session for the first time this week, continued to slip on Thursday, ending at 7.8236 after hitting a low of 7.8302. That compared with Wednesday's close of 7.8234.
Dealers blamed a weaker yuan on the broad strength of the dollar after a private-sector report showed solid US job growth in November, suggesting continued resilience in the labour market.
The People's Bank of China had set the daily mid-point of the yuan at 7.8305, much weaker than Wednesday's 7.8226, which was the highest level since Beijing revalued the yuan in July 2005.
"A strong dollar is to blame for the yuan's slip today. There is unlikely to be any major rebound of the yuan this week unless the dollar loses its steam," said a Beijing-based trader.
Dealers said a maturing yuan/dollar currency swap had no impact on Thursday's trading. On December 9, 2005, the central bank carried out a $2.8 billion currency swap to sell dollars to 10 domestic banks - its second such move - and promised to buy the yuan back a year later, according to market sources. The swap will mature on Saturday and delivery should take place on Monday.
But traders said they had no information on whether the central bank would deliver or roll over the swap. The central bank has kept its activities in currency swaps secret. "The central bank is believed to deal with individual banks one after another in swap-related business," said a dealer at a major Chinese state-owned bank. "And only a few people involved in the deals know, and they are ordered to keep secret."
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