AGL 38.09 Decreased By ▼ -0.07 (-0.18%)
AIRLINK 136.34 Increased By ▲ 2.15 (1.6%)
BOP 9.20 Increased By ▲ 0.35 (3.95%)
CNERGY 4.72 Increased By ▲ 0.03 (0.64%)
DCL 8.85 Increased By ▲ 0.18 (2.08%)
DFML 38.34 Decreased By ▼ -1.44 (-3.62%)
DGKC 85.45 Increased By ▲ 0.30 (0.35%)
FCCL 35.15 Increased By ▲ 0.25 (0.72%)
FFBL 76.21 Increased By ▲ 0.61 (0.81%)
FFL 12.66 Decreased By ▼ -0.08 (-0.63%)
HUBC 108.70 Decreased By ▼ -0.75 (-0.69%)
HUMNL 14.73 Increased By ▲ 0.63 (4.47%)
KEL 5.58 Increased By ▲ 0.18 (3.33%)
KOSM 7.96 Increased By ▲ 0.21 (2.71%)
MLCF 40.78 Decreased By ▼ -0.59 (-1.43%)
NBP 70.94 Increased By ▲ 1.24 (1.78%)
OGDC 195.25 Increased By ▲ 1.63 (0.84%)
PAEL 26.96 Increased By ▲ 0.75 (2.86%)
PIBTL 7.46 Increased By ▲ 0.04 (0.54%)
PPL 168.02 Increased By ▲ 4.17 (2.55%)
PRL 26.19 Decreased By ▼ -0.17 (-0.64%)
PTC 20.34 Increased By ▲ 0.87 (4.47%)
SEARL 92.75 Increased By ▲ 8.35 (9.89%)
TELE 7.84 Decreased By ▼ -0.15 (-1.88%)
TOMCL 35.49 Increased By ▲ 1.44 (4.23%)
TPLP 8.91 Increased By ▲ 0.19 (2.18%)
TREET 17.29 Increased By ▲ 0.11 (0.64%)
TRG 59.27 Decreased By ▼ -1.73 (-2.84%)
UNITY 31.02 Increased By ▲ 2.06 (7.11%)
WTL 1.37 No Change ▼ 0.00 (0%)
BR100 10,901 Increased By 125.5 (1.16%)
BR30 32,654 Increased By 420 (1.3%)
KSE100 101,357 Increased By 1274.6 (1.27%)
KSE30 31,488 Increased By 295 (0.95%)

The yuan closed higher against the dollar on Tuesday, taking its cues from the US currency's decline on global markets, but dealers expected the yuan's gains to remain modest in the near term.
Rising inflation, among other factors, has recently helped to weaken market expectations of how quickly the yuan could rise in the coming weeks or months, dealers said.
The pace of the yuan's gains has slowed since the start of February, partly reflecting a steep two-day weakening last Friday and Monday, immediately following a visit to China by US Treasury Secretary Henry Paulson. "As China's inflation shows signs of an increase, upward pressure on the yuan is easing," said a dealer at a major Chinese commercial bank.
"Although the central bank may still have to allow the yuan to appreciate in the long run, the market believes it has more leeway to do it at a leisurely pace," he said.
Economic theory dictates that a rapidly growing economy would have an exchange rate that appreciates in real terms via a higher nominal exchange rate, faster inflation than the country's trading partners, or a mixture of the two.
The yuan closed at 7.7430 to the dollar, up slightly from Monday's close of 7.7520, after hitting an intraday high of 7.7400. The day's low was 7.7480. Dealers said they expected the yuan to move between 7.7300 and 7.7600 this week.
Before the start of trade, the central bank set a stronger daily mid-point for the yuan at 7.7397, up from Monday's mid-point of 7.7474, reflecting overnight dollar weakness on global markets, dealers said.
But the market failed to boost the yuan as far as the mid-point, particularly after February consumer price data was published in the morning, dealers said. Consumer price inflation was 2.7 percent in February, up from 2.2 percent in January but just below the market forecast of around 2.9 percent.
The data was distorted by the Chinese New Year holiday, but even combining January and February to iron out distortions by the timing of the holiday, inflation was 2.4 percent compared with a year earlier, while in the same two months of 2006 the increase was 1.4 percent.
The central bank auctioned 140 billion yuan ($18 billion) of one-year bills in its regular open market operation on Tuesday at 2.8701 percent, above market forecasts of 2.79 to 2.84 percent and against 2.8383 percent for such bills sold last week.
Traders said the central bank's willingness to let the one-year bill yield rise over the past two weeks, after keeping it almost flat for the previous several months, suggested it might be preparing to tighten monetary policy further, possibly with an official interest rate hike.
One-year NDFs quoted the yuan at 7.3190/7.3240, indicating appreciation between 5.68 and 5.75 percent from Tuesday's yuan mid-point. The NDFs showed appreciation between 5.49 and 5.56 percent on Monday.

Copyright Reuters, 2007

Comments

Comments are closed.