Vs Parity Previous USD/CNY Central Parity 6.1703 6.1726 USD/CNY OTC 0830 GMT 6.1225 -0.77% 6.1192 High 6.1228 -0.77% Low 6.1143 -0.91% SHANGHAI--China's yuan fell against the U.S. dollar late Thursday after hitting a string of record highs, as banks bargain hunted the greenback to meet a regulatory requirement set by the Chinese central bank. On the over-the-counter market, the dollar ended at CNY6.1225, up from Wednesday's close of CNY6.1192. The dollar traded as high as CNY6.1228 and as low as CNY6.1143, its lowest since the launch of the modern Chinese currency-trading system in 1994. "We saw strong dollar buying in the late afternoon. Much of the buying interest was from Chinese banks," said a Shanghai-based trader at a local bank. These banks bought the dollar to satisfy China's regulations governing their foreign loan-to-deposit ratios, said the trader, without naming the banks. "Chinese banks must limit the ratio to 75%, but few of them meet the target. The dollar's declines offered them an opportunity to push up the ratio," he said. The regulation was announced by the State Administration of Foreign Exchange, a unit of China's central bank, in May. Earlier this year, the ratio in China's banking system as a whole was about 170%, traders said. To lower the ratio, banks could either increase U.S. dollar-denominated deposits or scale bank foreign exchange currency lending. In spite of the greenback's last-minute rebound, traders remain bullish about the Chinese currency. "Some consolidations are inevitable given the yuan's recent strength, but I think it will likely resume the upward trend after consolidations," said the Shanghai-based Chinese bank trader. Traders said China's July trade data offered a surprise on the upside, which should at the very least provide some relief for those with concerns about China's sharp growth deceleration. Customers' data show that exports from the world's second-largest economy rose 5.1% from a year earlier, sharply higher than the 2.8% gain expected by economists polled in a Dow Jones survey. Imports surged 10.9% last month, blowing past the 1.3% increase expected by economists and suggesting some recovery in domestic demand. "Yuan appreciation expectations are rising, and China's higher interest rates are driving people to put more bets on the yuan," said a foreign bank trader at a local bank. At its strongest point of 6.1143, the yuan rose 1.9% against the U.S. unit so far this year. Offshore, one-year dollar/yuan nondeliverable forward contracts fell to 6.2620/2660 from 6.2760/6.2780 late Wednesday, implying a 2.2% fall by the yuan over the next year. In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar fell to CNY6.1150 from CNY6.1182 Wednesday.

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