China's yuan closed slightly weaker against the dollar on Thursday, staging a mild correction guided by the central bank after hitting post-revaluation highs in each of the previous six trading sessions.
The yuan ended at 7.6188 to the dollar, down from Wednesday's close of 7.6180. Wednesday's intraday high of 7.6155 was the yuan's strongest level since it was revalued and depegged from the dollar in July 2005.
Dealers said the People's Bank of China appeared to be aiming to curb the pace of yuan appreciation after the recent rise, with its mid-point setting the tone for Thursday's fall. Before the start of trade, the central bank fixed its daily mid-point at 7.6208, below Wednesday's 7.6180 and breaking a six-session streak of consecutive post-revaluation peaks.
"It is uncertain whether the yuan will continue its recent faster pace of appreciation in the longer term, but a short-term correction is inevitable," said a dealer at a major Chinese state-owned bank.
"We may get clues on the yuan's trend from further policy news from the authorities or with more economic data," she said. Before Thursday's fall, the yuan had gained 0.58 percent over eight trading days, translating into an annual appreciation rate well over 10 percent, raising the question of whether the yuan would rise at a faster rate.
However, China's deputy central bank chief, Wu Xiaoling, said on Thursday that Beijing would stick to its two-year-old policy of gradual appreciation, calling on other countries to be patient with the pace of foreign exchange reforms.
Wu's remarks came after Wednesday's statement by US Treasury Secretary Henry Paulson that the pace of reform was still too slow and the yuan was still undervalued, although he said Beijing had taken steps toward exchange rate liberalisation.
Comments
Comments are closed for this article.