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  • Nov 8th, 2005
  • Comments Off on Chinese yuan retreats as dollar firms globally
China's yuan softened against the dollar on Monday as the US currency strengthened in global markets. The yuan, which was revalued by 2.1 percent on July 21 to 8.11 per dollar, closed at 8.0877 versus 8.0856 on Friday.

"The yuan's recent weakness was a result of a stronger dollar," said a trader with a Shanghai lender. "It seems to tie in more and more closely with the greenback."

Globally, the dollar marked a two-year high against the yen and held near an 18-month peak versus the euro on Monday after soft jobs data failed to dent expectations that the US currency's interest rate advantage will keep widening.

It had hit a two-year high against the yen and kept gains versus the euro on Friday.

The Chinese currency, also known as the renminbi, is now 0.27 percent stronger than its initial post-revaluation level.

Dealers said the yuan was unlikely to jump higher in the coming days unless the greenback's rally lost steam. The Chinese currency was more likely to continue its gradual climb versus the dollar in the long run.

On Monday, the currency firmed against the euro to close at 9.5676 compared with 9.6560 on Friday, and strengthened to 6.8580 per 100 yen from 6.8675, the central bank said on its Web site.

One-year onshore yuan forwards were quoted at 7.8150 to the dollar on Monday, indicating the market believes the yuan will be 3.3 percent firmer in a year's time.

Five deals were done on Monday versus three on Friday.

Copyright Reuters, 2005


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