China's yuan weakened slightly on Friday as traders kept their eyes on the dollar following the interest rate hike by the European Central Bank.
The yuan ended at 8.0367 against the dollar, down from Thursday's 8.0366.
The Chinese currency has now appreciated 0.9 percent since it was revalued to 8.11 against the dollar in July.
Traders said the yuan's fundamentals remained healthy and they expected the Chinese currency to continue its upward march next week.
"The European central bank raised interest rates and the dollar traded lower against the euro," said a dealer at a major international bank in Shanghai." The trend is for the yuan to get stronger."
The ECB lifted rates on Thursday to 2.5 percent, a three-year high.
The yuan passed the 8.0400 mark on Wednesday and analysts believe the currency will chalk up further gains and potentially breach the 8.0300 level in the coming days.
This could be due to an easing of control on the part of the central bank, they said, which has frequently been perceived as being keen to slow the yuan's rise, particularly when it approached significant levels against the dollar.
Pressure from the US ahead of President Hu Jintao's visit to Washington in April could also lead to the currency strengthening further, the trader said.
"By the end of next week the yuan will probably pass 8.03, unless something major happens or the dollar rebounds," the trader said.
On Friday, the central bank set the yuan's daily mid-point at 8.0380. The yuan can theoretically rise or fall 0.3 percent from its mid-point during the day, though it has only moved a fraction of that range so far in daily trade.
The Chinese currency strengthened to 6.9050 to 100 yen compared with 6.9070 on Thursday, and slipped against the euro to 9.6600 from 9.5890.
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