China's yuan ended unchanged on Tuesday above 8.0000 per dollar, one day after strengthening beyond that psychologically important barrier for the first time since its revaluation last July.
The yuan closed at 8.0030 to the dollar, the same as Monday, after the People's Bank of China set the daily mid-point of its exchange rate at 8.0150 versus 7.9982 the previous day.
The surprisingly weak mid-point came as the dollar gained on the global market. But the yuan was also in demand as investors bet the currency would continue its slow but steady appreciation against the dollar of recent months, traders said.
"That helped push down the dollar globally and lent some strength to the yuan in the afternoon," said a Shenzhen-based trader.
The yuan sank as low as 8.0150 at one point in the morning but climbed later in the day.
The Chinese currency has strengthened steadily since last July, when China revalued it by 2.1 percent and freed it from a dollar peg.
But the ascent has not been fast enough for China's trading partners, particularly the United States, which argues that an undervalued yuan has kept Chinese exports artificially competitive and contributed to China's huge trade surplus.
The yuan has appreciated 1.3 percent since the July revaluation. Analysts have said they expect it to strengthen by 3 percent in 2006.
"There could be dips along the way," said a trader with a major European bank. "But I won't be surprised to see it top 8.0 again soon."
Comments
Comments are closed.