UPDATE: China Yuan Ends Up On Denial Of Depreciation Reports

(Adds closing levels.)





Vs Parity Pvs

USD/CNY Central Parity 6.8363 6.8352

USD/CNY OTC 0930 GMT 6.8380 +0.02% 6.8395

High 6.8409 +0.07%

Low 6.8362 -0.001%



Beijing denied reports that quoted Chinese senior officials as saying the yuan could depreciate due to weak exports and rising unemployment, helping the Chinese currency to end up against the U.S. unit Wednesday.

Dealers said they expect recent volatility in the yuan to cease and forecast a near-term range for the U.S. dollar of CNY6.8360-CNY6.8390 because Beijing's denial of the reports had lowered expectations of yuan depreciation.

On the over-the-counter market, the dollar was at CNY6.8380 around 0930 GMT, down from Tuesday's close of CNY6.8395. It traded between CNY6.8362 and CNY6.8409.

The National Development and Reform Commission rejected a media report Tuesday that quoted its vice chairman, Zhang Xiaoqiang, as saying the U.S. dollar could strengthen to between CNY6.95 and CNY7.00.

The report on the Web site of China Briefing sparked buying of the dollar against the yuan Tuesday afternoon.

'Our official has never accepted interviews with any media and has never made such comments,' the NDRC said in a statement posted on its Web site.

In a China Briefing story Wednesday, China Banking Regulatory Commission Chairman Liu Mingkang was quoted as saying the yuan may weaken to around CNY6.9-CNY7.0 against the U.S. dollar.

The CBRC denied its chairman had been interviewed by China Briefing.

Later Wednesday, China Briefing issued a clarification on its Web site, backing away from attributing specific dollar-yuan levels to any government officials.

The author of the reports, Chris Devonshire-Ellis, told Dow Jones Newswires that specific levels came up during discussions with government officials, but he declined to say who made the comments.

'The market is expected to return to calm again after such a farce,' said a Shanghai-based dealer at a Chinese bank.

Analysts said Beijing will keep the yuan's stability as a priority to ensure stable growth in the Chinese economy during the global economic downturn.

'The steady fixing shows Beijing's long-term intention is to keep the yuan stable,' said a Shanghai-based dealer with a foreign bank.

The dollar-yuan central parity rate was set at 6.8363, up from 6.8352 Tuesday.

A senior official at the foreign exchange regulator reiterated Beijing's stance over a stable currency Wednesday. Deng Xianhong, vice director of the State Administration of Foreign Exchange, said that 'the most important thing is to prevent big swings in the exchange rate.'

It is normal for the yuan exchange rate to fluctuate but excessive volatility isn't good and China will continue to keep the exchange rate at a reasonable and balanced level, Deng said at a news briefing.

The denial of the reports also led to a sharp decline in offshore dollar-yuan nondeliverable forwards. The benchmark one-year NDF contract was quoted at 6.9609/6.9759, down from 6.9900/7.0100 late Tuesday afternoon.