China let the renminbi drop slightly in value against the dollar yesterday in a move that analysts said was designed to deter speculators benefiting from a stronger Chinese currency.

The central bank initially set the reference point for the day's trading 0.43 per cent above Monday's level, to the highest level in five years, which appeared to be a signal it was comfortable to see further modest appreciation in the currency. On Wednesday, the central bank set the reference rate at Rmb6.8102, or 0.18 per cent lower than Tuesday’s level.

Although the renminbi initially rose against the dollar on Tuesday, by the end of trading it had fallen 0.23 per cent to Rmb6.8136. Traders said that state-owned banks had been in the market buying dollars, which they saw as a sign that the authorities were trying to control tightly the value of the renminbi and limit expectations of future gains. On Monday the currency rose 0.42 per cent against the dollar.