China's yuan slipped against the dollar on Friday as traders shifted to expecting a slower rate of appreciation after Chinese President Hu Jintao gave no hope in Washington to those pushing for a dramatic revaluation.
The yuan closed at 8.0170 to the dollar, versus Thursday's close of 8.0115 after the People's Bank of China, the central bank, set the mid-point of the daily exchange rate at a weaker 8.0210. Thursday's mid-point was 8.0126.
"The market is lowering its anticipation on how far the yuan will appreciate in the medium term as Hu's remarks made in the United States indicate a more hawkish currency position than the market had expected," said a Shanghai-based dealer at a foreign bank.
"Hu's comments are also the clearest-ever message China has delivered to the market: China, not anyone else, will decide the pace of the yuan's appreciation."
The yuan has generally trended weaker since it hit 8.0022 on April 10, its strongest level since last July when the currency was revalued by 2.1 percent to 8.11 per dollar and freed from a dollar peg to float within managed bands.
The weakening follows a quickened appreciation ahead of Hu's US trip, which had once fuelled expectations that the yuan would soon break through 8.0000.
"Demand for the dollar was strong throughout the day," said a Shenzhen-based trader. "It could take longer for the yuan to hit 8.0 than expected given the plunge today."