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China's yuan sets another mark
(Reuters)
Updated: 2005-08-02 07:26
China's yuan closed at a post-revaluation high against the dollar for a third straight
session Monday, with many dealers seeing increasing leeway to allow the currency
to gain but some economists saying it was too early to tell, the Reuters
reported.
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| A
bank teller counts dollars at a branch of Bank of China in Shanghai,
August 1, 2005. [newsphoto] | The central bank
remained absent throughout, traders said, as the currency closed at 8.1046 to
the dollar, up from Friday's rate of 8.1056 and showing a 0.07 percent
appreciation since July 21, when Beijing revalued the yuan by 2.1 percent to
8.11 per dollar.
Dealers say the People's Bank
of China (PBOC) has been keen to give the impression that market
forces are at work, by allowing creeping gains against the greenback, the
Reuters report said.
The daily ranges remain narrow, not because the central bank is directly
controlling the market but because traders, operating in uncharted waters, fear
buying the yuan at high prices that might prompt official selling, driving the
thinly traded currency lower again.
"This is a regime shift. You're going into the unknown. This is not only true
for the traders but also the PBOC," said JPMorgan currency analyst Claudio
Piron.
"The PBOC is still feeling its way around, trying to gauge the market. Given
that we conceptually have a crawling peg, although that is currently
non-existent, it's probably not trying to make the yuan wholeheartedly fixed."
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