By Lu Jianxin and Pete Sweeney
SHANGHAI Aug 7 China's yuan closed at a record
high of 6.1192 against the dollar on Wednesday, its highest
since the foreign currency market was created in 1994, stirring
speculation as to whether the central bank is ready to allow
further appreciation despite weak exports.
The currency has gained percent 1.8 percent so far this
year, bucking a weak trend in emerging market currencies, but
has flattened out since setting repeated record highs in April
The central bank set its official midpoint at
6.1726 on Wednesday morning, only 0.04 percent stronger than
Tuesday's 6.1753, but the spot yuan took advantage of
the fixing to move into new territory for the first time since
Traders said Wednesday's midpoint move appeared to be fixed
higher tracking a 0.3 percent fall in the dollar index <.DXY >
overnight, but were unclear about why the spot market turned
Market participants widely believed that the People's Bank
of China has been moving to stabilise the currency in the wake
of disappointing export figures and signs of capital outflows,
with some economists even predicting a round of mild
depreciation in the offing.
Some suggested the central bank itself was responsible for
the spot quote, because strengthening the yuan is part of its
wider reform programme.
"Many in the market believe that unusual quotes often come
from the PBOC's trading room directly, although no one can be
certain," said a trader at a European bank in Shanghai.
"The market is now divided as to whether the PBOC is testing
waters for a stronger yuan ... The PBOC's official fixing did
not give any sign of another round of yuan appreciation."
China's exports, factory output and retail sales may have
all edged up in July, according to a Reuters poll, showing
initial signs of stabilisation in the economy as the government
takes targeted steps to head off a sharper slowdown.
Trade data will be released on Thursday.