Four weeks of gains give way to dip

By Winny Wang  |   2008-7-7  |     NEWSPAPER EDITION

THE yuan weakened 0.12 percent to 6.8589 against the US dollar last week after four weeks of gains, according to the China Foreign Exchange Trading System.

The dip came on the heels of tighter moves by China's currency regulator to battle against speculative capital flowing into the country that may worsen inflation.

Three government departments, the State Administration of Foreign Exchange, the Ministry of Commerce and the General Administration of Customs, will link their internal electronic systems from July 14 to monitor foreign exchange receipts and export settlements.

The customs administration said by scrutinizing advance export receipts and the actual exports later, it aimed to prevent speculative overseas funds from entering the country under the guise of trade.

It also said monitoring deferred payments for imports could prevent a possible large capital flight in the future.

The yuan has gained about 6.5 percent this year, boosting foreign-exchange reserves to more than US$1.68 trillion.