Yuan Forex News at 28 August 2007

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥115.15 level and was supported around the ¥113.85 level - as GCI Forex said. Technically, today’s intraday high was right around the 38.2% retracement of the move from ¥111.65 to ¥117.10. New finance minister Nukaga reported “Fundamentally speaking, the Japanese economy has not shown any major changes” and noted the economy “has not fully recovered yet from deflation.” Most traders believe Bank of Japan will lift the overnight call rate by +25bps to +0.75% by the end of the year.

The Nikkei 225 stock index lost 1.69% to close at ¥16,012.83. Dollar bids are cited around the ¥113.75 level. The euro appreciated vis-à-vis the yen as the single currency tested offers around the ¥157.25 level and was supported around the ¥154.50 level. The British pound and Swiss franc moved higher vis-à-vis the yen as the crosses tested offers around the ¥232.10 and ¥96.05 levels, respectively.

The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5487 in the over-the-counter market, down from CNY 7.5565. People’s Bank of China Deputy Governor Su Ning reported the 2007 CPI is likely to exceed the government’s 3% target rate. Deutsche Bank reported China is likely to hike interest rates again in