BEIJING, May 10 -- The dollar strengthened Monday against most major currencies after China refrained from loosening its fixed exchange rate despite a special trading session at the end of the national holidays last week.

    But the dollar's gains were limited, as investors closely watched Beijing's currency policy.

    Major currencies fell after the US federal reserve's interest rate growth.

    Japan's yen fell to the lowest in more than a week against the dollar and slid versus the euro as speculation waned that a Chinese revaluation of the yuan is imminent.

    The pound fell as the Bank of England left the interest rate at 4.75 percent for a ninth consecutive month amid evidence that the economy is slowing.

    The euro inched higher even as retail sales in the 12 euro-zone nations fell in April for the fourth consecutive month.

    But major Hong Kong banks announced Wednesday that they will keep the prime interest rate unchanged although they will adopt a slightly different prime rate.

    How will these interest rates influence the US economy itself? Dai Peng, a researcher with the Renmin University taxation institute explains.

    "After the year 2004, the oil price rose dramatically to hit 50 dollars a barrel. The exchange rate increase could help erase those uncertainties in the US Economy as it will help reduce and over-investment in the oil market," Dai said. 

    Nothing happened last weekend in the Chinse mainland as investors closely watched Beijing's currency policy.

    "On the one hand, it will help ease the pressure of speculation on the Renminbi market and help stabilize it. And it will also help reduce speculation in other sectors like real estate, insurance and bonds which can also create a stable price environment for the Chinese economy," Dai Peng continues. 

    Professor Dai said China's economic growth is still too high, suggesting restrictions on lending and investment are unlikely to be relaxed.

    The economy expanded 9.5 percent from a year earlier in the first quarter, faster than the government's maximum projection of 9 percent.

    Chinese Premier Wen Jiabao last year ordered banks to curb lending to industries including real estate, steel and autos after surging fixed-asset investment drove raw-materials prices higher and strained power supplies.

    The Institute of International Finance said China's economic growth this year may match 2004's 9.5 percent, which was the fastest since 1996.

    Last week, the World Bank raised its 2005 economic growth forecast for China to 8.3 percent from a November estimate of 7.8 percent, citing stronger-than- expected exports and consumer spending.

(Source: CRIENGLISH.com)