China's yuan ended lower against the dollar on Friday for a third straight day, retracing after a rally through the psychologically key 7.60 mark earlier in the week, but dealers expected it to resume its uptrend soon.
The yuan closed at 7.6010 to the dollar, below Thursday's finish at 7.5984, after the central bank set the yuan's mid-point at 7.6135 to the dollar, down from 7.6060 the previous day.
Friday marked the third day in a row of a weaker mid-point - a reference rate that fixes the parameters for the yuan's movements. The pull-back followed a strong rally in the Chinese currency since June 11 without a significant correction.
On Tuesday, the yuan broke the key 7.6000 level for the first time and hit an intraday high of 7.5929 to the dollar, its highest trading level since Beijing revalued the yuan and depegged it from the dollar in July 2005.
"The yuan will give back some of its gains each time it breaches a new level," said a Shenzhen-based trader. "But it could resume the uptrend next week and possibly hit new highs."
The yuan has appreciated 6.65 percent since its revaluation. Traders and economists have projected a moderate 4 to 5 percent rise for the full year despite rising outside pressure on China, especially from the United States, to let its currency appreciate faster.
Two leading Democratic contenders for the US presidency, Senators Barack Obama and Hillary Clinton, have joined a congressional push to punish countries that undervalue their currencies, seen as aiming to turn up the heat on China. One-year offshore non-deliverable forwards (NDFs) quoted the yuan at 7.2652/7.2702, indicating appreciation of 4.72 to 4.79 percent in a year's time from Friday's mid-point, up slightly from 4.68 to 4.74 percent on Thursday.
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