Yuan Little Changed as China `Fine-Tunes' Policy for Growth

By Judy Chen and Kim Kyoungwha

Aug. 18 (Bloomberg) -- China's yuan was little changed on speculation that the central bank will halt yuan gains to sustain economic growth as global demand weakens.

China will ``fine-tune'' monetary policy to strike a balance between supporting growth and fighting inflation, according to the central bank's second-quarter monetary policy report posted on its Web site on Aug. 15. The yuan has depreciated 0.2 percent against the dollar this quarter, following gains of 4.2 percent and 2.3 percent in the first and second quarters.

``Exporters are under great pressure,'' said Tang Liang, a foreign-exchange trader at the Beijing branch of Industrial & Commercial Bank of China Ltd., the nation's largest bank. ``The central bank will adjust the pace of appreciation to help exports. We will see more fluctuations.''

The yuan traded at 6.8701 a dollar as of 9:34 a.m. in Shanghai, from 6.8700 on Aug. 15, according to the China Foreign Exchange Trade System.

``External demand will continue to weaken, and the negative impact on exports, economic growth and employment will emerge further,'' said the central bank in the report. It pledged to keep the yuan stable at a ``reasonable'' level.

Gross domestic product grew 10.1 percent in the second quarter from a year earlier, down from 10.6 percent in the first three months, the statistics bureau said last month in Beijing.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.