A Chinese official told Reuters in an interview that China, which has been under heavy pressure to relax the pegging of its currency to the dollar, needed more time to prepare for making the yuan more flexible.
The comments come ahead of a meeting of the Group of Seven finance ministers and central bankers on Feb. 4-5, with many in the market expecting exchange rate flexibility to be a focus of the discussions.
"Given the timing, this seems to be a pretty obvious message from China to 'lay off pressuring us on the yuan at the G7'," said Mitsuru Sahara, vice president of forex dealing at UFJ Bank.
"It's looking more and more like the G7 will be a non-event and the yuan revaluation is further away than we thought."
But then again, that was yesterday. The most recent Reuters report had this to say:
The yen jumped on Wednesday, retracing some of this week's losses, after China said it would discuss the yuan at an upcoming meeting of the Group of Seven economic powers, rekindling speculation of a yuan revaluation.
A Chinese official said that the country's finance minister would attend next week's G7 meeting in London and that there would be a "deep dialogue" on issues including the yuan.
This seems a fair statement:
"We've had some conflicting signals in the last 24 hours on China," said Daragh Maher, senior currency strategist at Calyon.
"Yuan revaluation will be a topic of discussion at G7, but whether we will actually get some change of language on the yuan is questionable."
Should be an interesting meeting.