China's yuan closed at a post-revaluation high against the dollar on Friday, guided by the central bank's strong mid-point, but dealers expected a downward correction next week after unusually strong gains in recent weeks.
The US Federal Reserve's decision on Thursday to keep interest rates unchanged had little impact on yuan trade, although any dollar strength in the global markets could have a negative impact on yuan appreciation in the long run, dealers said.
The yuan closed at 7.6132 to the dollar after a late-session surge that erased early losses, up from Thursday's finish of 7.6151 and its highest trading level since it was revalued and depegged from the dollar in July 2005.
Before the start of trade, the People's Bank of China fixed the yuan's daily mid-point at 7.6155 to the dollar, the strongest mid-point since the revaluation.
The central bank has set a series of record high mid-points over the past three weeks, guiding the yuan to a gain of 0.66 percent during the period, for an annual appreciation rate of more than 10 percent.
"The yuan has not seen a decent correction over the past three weeks and banks have accumulated heavy yuan positions to be cleared," said a dealer at a Chinese commercial bank. "We expect it to pull back next week, possibly to the 7.63 or 7.64 level, subject to central bank's intentions," he said.
The Fed, which held interest rates steady at 5.25 percent on Thursday, also repeated its worries about stubborn price pressures, reinforcing expectations that the US central bank may keep rates steady for some time.
Comments
Comments are closed for this article.