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China's yuan softened a notch against the US dollar to a still-firm 8.2771 yesterday and is expected to remain solid on strong exports during the year-end holiday season, dealers said.
The Chinese currency was shackled in a narrow three-tick range, logging an intraday low of 8.2772 and high of 8.2770.
Turnover dipped to $430 million from a healthy $460 million on Tuesday.
"Today's trade was quite active, comparable to yesterday's volumes," said a dealer at a state-owned bank in Beijing. "The yuan will stand strong as exports will remain brisk, especially when the holidays approach at the end of the year."
Most Chinese exporters are required to sell their hard currency earnings to banks designated to trade on the Shanghai-based national foreign exchange market.
The yuan is not freely convertible on the capital account and the central People's Bank of China has said it will gradually free up the currency, but it has given few specifics.
Dealers expect the yuan, also supported by robust foreign exchange reserves, to hover near the strong end of its usual band of 8.2760 to 8.2800 which the central bank enforces.
China's outstanding foreign exchange deposits were US$147.54 billion at the end of October, up US$2.23 billion from end of September, while forex reserves rose to US$265.5 billion from US$258.6 billion, official figures showed.
(China Daily November 28, 2002)
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