Yuan Falls for Fourth Day


The yuan fell for a fourth day, the longest losing stretch since July 2007, on speculation tighter controls on capital inflows will enable China to slow appreciation in the currency.

The central bank has kept the yuan almost unchanged in the third quarter as speculative capital betting on faster currency gains pump up the money supply, threatening to stoke inflation. China is revising its foreign-exchange management regulation to better control capital inflows and outflows, according to a statement on the government's Web site on Aug. 1.

The yuan declined 0.13 percent to 6.8515 per dollar in Shanghai as of 5:30 p.m., from 6.8425 on Aug. 1, according to the China Foreign Exchange Trade System.

The revisions to the regulations aim to establish emergency measures to safeguard international payments, improve the exchange-rate mechanism and enhance monitoring of cross-border capital flows, according to the government's statement. The State Council, the cabinet, approved the draft, it said.

The State Administration of Foreign Exchange, China's currency regulator, tightened controls on exchange of goods by asking exporters to register foreign-currency income on an electronic network, according to a July 2 statement on its Web site.

The People's Bank of China fixed a weaker reference rate for yuan trading for a fourth day. The yuan is allowed to trade by up to 0.5 percent against the dollar either side of the rate, which was set at 6.8471 today.


TradingEconomics.com, Bloomberg
8/4/2008 6:25:20 AM