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The yuan was little changed on speculation the central bank will halt currency gains to sustain economic growth as global demand weakens.
China will "fine-tune" its monetary policy to strike a balance between supporting expansion and fighting inflation, according to the central bank's second-quarter report posted on its Website on Friday. The yuan has weakened 0.3 percent against the United States dollar this quarter, following gains of 4.2 percent and 2.3 percent in the first and second quarters.
"Exporters are under great pressure," said Tang Liang, a foreign-exchange trader at the Beijing branch of the Industrial and Commercial Bank of China, the nation's largest bank. "The central bank will adjust the pace of appreciation to help exports. We will see more fluctuations."
The yuan closed at 6.8710 to the US dollar as of 5:30pm in Shanghai, against 6.8700 on Friday, according to the China Foreign Exchange Trade System.
It slid as much as 0.16 percent yesterday to 6.8808 per dollar, the weakest since June 20, Bloomberg News said.
"External demand will continue to weaken, and the negative impact on exports, economic growth and employment will emerge further," the central bank said in the report. It pledged to keep the yuan stable at a "reasonable" level.
The economy grew 10.1 percent in the second quarter from a year earlier, down from 10.6 percent in the first three months, the statistics bureau said last month in Beijing.
The Chinese currency has climbed 6.9 percent versus the euro, 6.3 percent against the pound and 4.3 percent against the yen in the third quarter. The central bank has managed the yuan's exchange rate against a basket of currencies, including the euro, the pound and the yen, since a peg to the greenback was scrapped in 2005.
"The yuan is still gaining on a trade-weighted basis despite its weakness against the dollar," said Zhang Li, a foreign-exchange trader at the Industrial Bank Co in Shanghai. "This helps ease foreign pressure while giving a relief to exporters as the US dollar is the most-used currency in trade."
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