(FT) -- China let the renminbi drop slightly in value against the dollar on Tuesday in a move that analysts said was designed to deter speculators benefiting from a stronger Chinese currency.
The central bank initially set the reference point for the day's trading 0.43 per cent above Monday's level, to the highest level in five years, which appeared to be a signal that it was comfortable to see further modest appreciation in the currency.
However, although the renminbi initially rose against the dollar, by the end of trading it had fallen 0.23 per cent to Rmb6.8136. Traders said state-owned banks had been in the market buying dollars, which they saw as a sign that the authorities were trying to control tightly the value of the renminbi and limit expectations of future gains. On Monday the currency rose 0.42 per cent against the dollar.
Movements in the Chinese currency have been under intense scrutiny this week after the central bank announced on Saturday that it would introduce a more flexible exchange rate regime. This was widely interpreted to mean a return to gradual appreciation against the US dollar.
