Yuan on a tear, rises for ninth day in “mini-revaluation”

The yuan extended a rally on Tuesday to nine days, rising the most in that period since January 2008 following strong criticism from U.S. President Barack Obama about China's currency policy.
Trading in offshore yuan forwards was busy after the People's Bank of China (PBOC) lifted the yuan's mid-point, its daily reference rate around which the currency is allowed to trade against the dollar, for a ninth consecutive day, the longest string of gains since the landmark July 2005 revaluation.
The mid-point was set at 6.6997 yuan per dollar, from which the yuan can rise or fall 0.5% versus the dollar, compared with Monday's 6.7110.
"The market is now convinced that the PBOC is taking action to let the yuan stage a mini-revaluation and many of us expect the yuan to continue to rise steadily in coming weeks to reach 6.6 or even stronger," a Chinese bank dealer in Shanghai said.
Ahead of a long holiday in China, traders said bargain hunting for dollars on behalf of banks' corporate clients kept the yuan in the spot market from reaching its fixing level.
The yuan was at 6.7040 to the dollar in late morning trade, up from 6.7135 on Monday and up 1.35% in nine trading days.
"But the yuan still has the potential to breach 6.7000 in trading later in the day," said a European bank dealer.
China's foreign exchange market will be closed from Wednesday to Friday for a public holiday, and traders said they expected the yuan to continue rising under the PBOC's guidance when the market resumes trading next Monday.
Obama said on Monday that China had not done enough to raise the yuan's value, keeping up tough American rhetoric ahead of mid-term U.S. congressional elections in November.
So far, Chinese officials have been silent during the record rise in its currency, apparently letting the mid-point fixings communicate intentions with the market.
Hong Kong-based traders said the series of stronger yuan fixings by China was also feeding through to the fledgling onshore deliverable forwards market in Hong Kong where selling pressure was picking up.