The yuan is expected to trade between 7.9950 and 8.0180 against the US dollar this week, a foreign currency trader said.
The market has been bracing for a stronger yuan and wider volatility after the currency strengthened beyond 8 against the US dollar early last week and weakened slightly later amid a rebound by the greenback.
The yuan ended at 8.0220 against the greenback last week in Shanghai, after touching the week's high and also the opening price of 7.9982 last Monday.
"The yuan broke the psychologically important 8 level on Monday amid a weakening US dollar against other major currencies across the market," said Zhu Heng, a foreign currency trader at the Industrial and Commercial Bank of China based in Beijing. Asian currencies have broadly moved up against the US dollar, with the Japanese yen gaining 5.3 percent till last Monday from the beginning of 2006, 4.9 percent by the Malaysian ringgit and 5.7 percent by the Singapore dollar in the same period.
The yuan than traded slightly above the 8 level against the US dollar last week as the greenback rebounded in international markets. A spurt in US dollar buying among traders at its record-low price early last week also pushed its rate higher, traders said.
For instance, the US dollar moved back to touch a session high of 111.02 yen on Friday. Despite the short-term weakening trend last week, the yuan is seen to rise and break the 8 level once again in the coming weeks.
The central bank made the central parity rate on the weighted average of quotes from 15 commercial lenders from home and abroad, or market players, since January 4. Under the current managed floating system, the central bank allows a 0.3 percent daily trading band.
(Shanghai Daily May 22, 2006)
