The yuan fell slightly against the dollar on Friday for the fifth straight day and dealers said the central bank was suspected of using the dollar's firmness on global markets to slow the yuan's appreciation. The yuan was trading at 7.8735 to the dollar after hitting an intraday high of 7.8707 and a low of 7.8750. It closed at 7.8715 on Thursday.
The central bank set the yuan's daily mid-point at 7.8745 on Friday morning, weaker than 7.8733 on Thursday. This reflected overnight strength of the dollar globally, but was also seen as a sign of the central bank's attitude toward the exchange rate. "The central bank appears to aim to keep the yuan steady for a while after a faster pace of appreciation in the past couple of months."
Dealers said the yuan's fall over the past five days, a move totalling less than 0.1 percent, was symbolic - reflecting the central bank's desire that the currency should move in two directions rather than appreciate without pause.
The yuan gained nearly 1 percent from September 15 to Monday, rising at an annual rate of 7 percent - its fastest pace of appreciation in any two-month period since Beijing revalued it by 2.1 percent and freed it from a dollar peg in July 2005.
"The yuan's fall in the past few days is a gesture showing that the central bank is encouraging two-way trading," said a dealer at a major Chinese commercial bank. "But a gesture is a gesture. It won't prevent the yuan from rising at a relatively fast pace for the rest of this year."
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