Yuan ends down

China's yuan closed slightly lower against the dollar on Wednesday, guided by the central bank's weaker mid-point and stabilising after climbing to post-revaluation highs for three consecutive sessions.
Dealers said it was not surprising for the yuan to retreat slightly after its recent strong performance, but added it should be able to hold steady around the 7.6000 level, which it breached for the first time on Tuesday.
"The yuan won't pull back much below 7.6000 and it will continue its pace of appreciation in the longer run," said a dealer at a Chinese commercial bank, noting that the yuan had held firmly above 7.6000 on Tuesday.
The yuan closed at 7.5947 to the dollar, down slightly from Tuesday's finish at 7.5944, after moving in a narrow range between 7.5939 and 7.6000. Before the start of trade, the People's Bank of China fixed the yuan's daily mid-point at 7.6007, down from Tuesday's 7.5951, the highest mid-point since Beijing revalued the yuan and depegged it from the dollar in July 2005.
Dealers said the yuan would also be buoyed by a weakening of the dollar on global markets, where it was holding near a 26-year low against the pound and remained weak against the euro.
"The central bank could not ignore the fact that the dollar has been weak against other major currencies these past few days, which might affect the yuan's performance in the near term," said a dealer at a major US bank.
The central bank reaffirmed on Tuesday its long-standing policy of keeping the yuan steady, however, dampening recent speculation that the yuan might appreciate faster in the longer term after its unusually strong rise since June 11.
At Tuesday's closing level, the yuan had gained 0.9 percent since June 11, for an annual appreciation rate of more than 10 percent, although no dealers expected it would rise at that level in the long term.
Some analysts also linked the yuan's unusually swift recent rise with celebrations surrounding the 10th anniversary of Hong Kong's handover on July 1, suggesting it was more of a political statement than an economic policy shift.