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On the foreign-exchange market, China's yuan closed two notches higher against the dollar at 8.2772 yesterday as an ample dollar supply on the market helped offset the country's first quarterly trade deficit in seven years, dealers said.
The yuan moved in a tight box of 8.2770 to 8.2773 as turnover rose to a decent US$440 million from US$360 million on Monday.
One European bank dealer said: "Strong dollar supply in the market helped keep the yuan firm. We expect the trend to continue in the near term."
The yuan, not freely convertible on the capital account, has been strong over the past year, moving near the high end of a thin trading box of 8.2760 to 8.2800 that the central bank enforces for reasons of economic stability.
Dealers said there was a hard-currency glut on the Shanghai-based foreign-exchange market as strong trade surpluses in previous years offset a deficit of US$1.03 billion in the first three months of this year.
China has also reported a sustained inflow of foreign investment for the past few years. Actual foreign direct investment hit US$13.09 billion in the first quarter of this year, up 56.72 percent from a year earlier, the government said.
But dealers said the yuan could come under pressure if the first-quarter trade deficit were repeated as the currency's movements within the government-set range were decided basically by the trade performance.
The yuan weakened slightly yesterday against the Japanese currency to 6.8764 per 100 yen from 6.8734 on Monday and eased to 8.9076 to the euro from 8.8864.
It ended a notch firmer against the Hong Kong dollar at 1.0609.
(China Daily April 16, 2003)
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