CHINESE yuan-denominated assets are not a “bargaining chip” for gamblers, Xinhua said in a commentary yesterday, in the latest attempt to curb speculative bets on a further rally in the currency.

The remarks came as China’s yuan hovered at a three-year high against the U.S. dollar, after rising 1.4 percent in the past four weeks.

A weaker U.S. dollar, China’s better coronavirus containment and solid economic data were among the factors supporting the yuan rally, Xinhua said, calling “investors to pay attention not only to market movements, but also to long-term [economic developments] to make wise decisions.”

“China has consistently adhered to a managed floating exchange rate system, any malicious manipulation of the market or malicious creation of one-way expectations will inevitably be hit or hedged, as transaction costs are high and the potential risks are huge,” Xinhua said.

“In fact, the People’s Bank of China has begun to tighten foreign exchange liquidity in the domestic market, intended to significantly increase speculation cost,” it added.

The commentary also said that chances of a bounce in the U.S. dollar could not be ruled out once the Federal Reserve makes a shift in its ultra-easy policy stance as the U.S. economic recovery picks up.

The spot yuan yesterday was little changed and pinned in a narrow trading range, as investors continued to debate how much more appreciation authorities will tolerate.

A host of Chinese policymakers have warned market participants recently against betting on one-sided moves in the currency and the People’s Bank of China on Monday raised the reserve requirement ratio on foreign exchange deposits for the first time in 14 years. The increase will make it more expensive for banks to hold dollars.

Guan Tao, a former senior official at China’s foreign exchange regulator, said said the central bank’s use of the foreign exchange reserve requirement ratio, a tool which it has used little in the past “shows that the central bank still has many tools in its toolkit, and it has plenty of freedom to choose. In the future if speculative trading appears in the foreign exchange market, it has a steady supply of macro-prudential tools at its disposal.” (SD-Agencies)