The official in the news depart-ment of the central bank said the speculative trading just reflected the market's expectations ahead of the G7 meeting.

"Every time when there is a major (economic) event, the market always reacts like this," the central bank spokesman said.

Asked if the central bank would again warn speculators about the risk of betting on a change in policy, the official said there was no such plan to issue a further advisory.

Previously, both the central bank and the State Administration of Foreign Exchange have warned traders about speculating on a yuan revaluation.

The offshore yuan market has been swinging back and forth in the leadup to the G7 meeting, to which China's Finance Minister Jin Renqing and PBOC Governor Zhou Xiaochuan have been invited.

The initial invitation fed market speculation that China would be pressured into reforming its yuan exchange rate policy. But official comments from China in the leadup the meeting have played down any chance of a break-through, causing the market to swing the other way.

(Shenzhen Daily January 31, 2005)