SHANGHAI: China's central bank guided the yuan lower against the dollar on Thursday after setting record-high midpoints in the previous four sessions, amid market speculation it may widen the band within which the currency is traded.
The yuan is allowed to rise or fall by 1 percent in either direction from the base rate, but in recent weeks Chinese regulators have made statements suggesting the trading band might be widened.
People's Bank of China deputy governor Yi Gang said at an IMF conference in Washington on Wednesday that the yuan's trading band could be further widened "in the near future" and that the yuan's exchange rate will be more market-oriented, the official Xinhua news agency reported.
On Thursday, the central bank fixed its official midpoint at 6.2416 versus the dollar from an all-time high of 6.2342 on Wednesday.
Spot yuan ended at 6.1813, down from 6.1723 at the close on Wednesday, its highest level since China established the domestic foreign exchange market in 1994.
To the great surprise of the market, the PBOC let the yuan appreciate 236 pips over the four previous trading days, setting new highs on the way, compared with only 154 pips for all 2012.
Some dealers said the statements on widening of the band were more posturing toward critics of China's currency policy than signals to the domestic market that the PBOC is genuinely planning to change the band.
"I think it's no more than rhetoric," said a dealer at a Chinese commercial bank in Shanghai.
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