China's yuan ended stronger against the dollar on Tuesday after hitting a post-revaluation high, guided by the central bank's firmer mid-point and rebounding after a slight correction late last week.
The yuan closed at 7.6159 to the dollar, up from Monday's close of 7.6194. It hit an intraday peak of 7.6145, its highest since Beijing revalued the currency and depegged it from the dollar in July 2005.
Before trade began, the central bank set its daily mid-point at 7.6184 to the dollar, up from Monday's 7.6192 and near 7.6180, the post-revaluation high mid-point set last Wednesday.
"The yuan will continue to be strong in the short term, since the central bank has already confirmed that the yuan would appreciate moderately. But there will always be corrections, as previous trade has shown," said a dealer at a Canadian financial firm.
The yuan had weakened slightly during a correction in the latter half of last week, when it digested gains from a rally that had taken it to post-revaluation highs for six straight trading sessions.
At its intraday high on Tuesday, they yuan had gained nearly 2.6 percent against the dollar since the start of this year and more than 5 percent since a year ago. In 2006, the yuan appreciated 3.4 percent.
Dealers expect the pick-up in the pace of appreciation will allow the yuan to be more flexible and bring greater volatility, although the latest uptrend was likely to encounter resistance at the psychologically important 7.6 level in the coming weeks.
"The Chinese currency is becoming more flexible now and it is also getting more difficult for the market to predict its trend," said a dealer at a major Chinese state-owned bank.
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