The yuan weakened in late trade on Wednesday, as the dollar rose against major Asian currencies on the global market ahead of two key events - testimony by Federal Reserve Chairman Ben Bernanke to Congress and the release of US consumer price data for June.
The yuan was quoted at 8.0025 on Wednesday, weaker than Tuesday's close at 7.9982, which snapped six straight sessions of losses. The dollar rose against major Asian currencies, including the Japanese yen, on Wednesday as the market anticipated that Bernanke's comments or the US CPI data for June would pressure the Fed to increase interest rates in August.
Bernanke is due to testify on the Fed's semi-annual monetary policy report before the Senate Banking Committee on Wednesday. The yuan strengthened on Tuesday after data showed Chinese annual growth surged to 11.3 in the second quarter. But Zheng Jingping, a spokesman at the National Bureau of Statistics, warned on Tuesday against speculation, saying China would not conduct another one-off currency revaluation.
Some investors interpreted Zheng's comments as confirming Beijing's support for gradual yuan appreciation. The central bank had set the mid-point at 8.0024 on Wednesday morning versus 8.0016 the previous day. The yuan has so far appreciated a further 1.34 percent since it was revalued by 2.1 percent to 8.11 per dollar in July 2005 and freed from a dollar peg to float within managed bands.
The yuan may rise or fall 0.3 percent from its mid-point each day, but it has moved only a fraction of that range in most trading sessions since the new regime was introduced. The yuan's peak since it was floated was 7.9850 on July 7.
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