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Possible rate cuts may see yuan decline

THE yuan may fall against the United States dollar within a limited range this week as officials hinted at possible Chinese interest rate cuts.

The Chinese currency edged up against the greenback last week at 6.8334 on Friday, according to the China Foreign Exchange Trade System. The yuan closed at 6.8346 at the end of the previous week.

"There is still room to cut interest rates although they're already at a fairly stable level," Yi Gang, vice governor of the People's Bank of China, said on Saturday in Beijing.

Yi also suggested China's main task in the short term will be to fight against deflation.

"Trading has been quite light as investors believe the yuan will remain stable at least through the first quarter," said Li Tao, a foreign-exchange trader at Shenzhen Development Bank Co.


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