The Chinese yuan slipped against the dollar on Tuesday - as Chinese President Hu Jintao left for his first formal visit to the United States - in line with a general strengthening in the US currency.
That drop was contrary to expectations, with many traders having bet that the Chinese authorities would allow the yuan to rise against the dollar to help Hu fend off US pressure for a faster appreciation in the currency.
The yuan closed at 8.0240 to the dollar, versus 8.0205 on Monday, after the central bank set its midpoint rate at 8.0140 versus 8.0158 the previous trading day.
Critics in Washington have been urging Beijing to let the yuan appreciate more quickly, saying an undervalued currency gives China an unfair export edge and fuels its trade surplus, which jumped to $11.2 billion in March from $2.45 billion in February.
With the trade and currency issues most likely to top the agenda during Hu's meeting with US President George W. Bush, many had expected the Chinese currency to test 8.0 per dollar.
"It turns out that we were wrong to bet on a stronger yuan ahead of Hu's trip," said a Shenzhen-based trader.
But the increasing unpredictability of the currency is itself testimony to Beijing's more liberal forex policy, other dealers said.
"It seems that the political factor played no part in the yuan's direction today," said a local trader, blaming the Chinese currency's weakness on a dollar that had regained strength on the global front.