China's yuan strengthened against the US dollar on Tuesday to close at 8.1012, with dealers saying the central bank was less involved in directing trade compared with the past few sessions. The yuan - which was revalued by 2.1 percent on July 21 to 8.11 per dollar - moved in a 40-tick range.
"It seemed the central bank was less active in quoting prices today, allowing the yuan to move in a greater-than-normal range," said a dealer at an European bank.
Dealers said the yuan could move slightly up to test the 8.10 level on Wednesday, but the central bank's presence remained an important factor in deciding the currency's movements.
Dealers said they saw the yuan continuing to firm after falling for three straight sessions until it strengthened on Tuesday.
They said the potential for central bank intervention to prevent the currency from gaining too much ground had kept sentiment cautious.
The yuan is allowed to strengthen or weaken by 0.3 percent daily, but has yet to come even close to using up that leeway.
It has appreciated just under 0.11 percent since July 21.
One-year onshore forwards were quoted at 7.855 on Tuesday, unchanged from Monday and indicating expectations of a 3.1 percent appreciation versus the dollar in a year's time, but no trades were done, exchange data showed.
The onshore forex forwards were launched last week, providing a benchmark for local expectations of the yuan's longer-term appreciation.
Trade has been thin so far as the domestic market is still feeling its way around the unfamiliar product, dealers say.
Investors speculating on a rise in the value of the yuan had turned previously to offshore non-deliverable forwards, which stood at 7.8426 on Tuesday afternoon.
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