China's yuan sets another mark
(Reuters)
Updated: 2005-08-02 07:26

Dealers, still trying to discern the many undisclosed details of the central bank's policy, took the currency's steady though marginal strengthening as evidence that the authorities were happy to allow progressively wider trading, Reuters said. 

Several said Beijing could stay on the sidelines as long as the yuan traded between 8.1016 and 8.1158 against the greenback -- 30 ticks above and below the range it has so far staked out, according to the Reuters.

"When the yuan hit the 8.1050 level, we saw numerous dollar buying orders, indicating that room for the yuan to rise much further would be limited right now," said a floor trader at a Chinese bank.

"The yuan should see some correction soon."

Muddled markets

Still, Beijing seemed to be quietly giving the yuan a longer leash, letting it move further from 8.11 per dollar, dealers said.

In letting the yuan trade higher and wider, the central bank appears to be taking deliberate baby steps towards the greater flexibility expected for its new system.

But the yuan has firmed only 0.07 percent since the revaluation. And while the daily range is much wider than the two or three ticks seen before the revaluation, it is still wafer thin by the standards of other currencies.

The central bank had been suspected of posting large quotes around 8.1050 against the dollar on Friday, but dealers said such quotes were not in evidence on Monday -- though plenty from market participants did appear, the Reuters said.

Central bank chief Zhou Xiaochuan said after the market closed on Friday that the yuan had begun normal floating, reflecting market supply and demand and changes in the exchange rates of major currencies in international markets.