BEIJING, Sept. 19 (Xinhuanet) -- The yuan closed Friday at its highest level versus the dollar since the July 21 revaluation for the third straight day, with dealers saying the central bank largely stayed out of the market.

    The yuan finished at 8.0871 versus the dollar, compared with Thursday's 8.0887, after also hitting an intraday high of 8.0869.

    "The yuan's strength over past days might be related to President Hu Jintao's visit to the United States, with the central bank being more tolerant than normal," said a dealer at a foreign bank. "It will likely fall back when Hu returns."

    U.S. President George W. Bush this week urged China to do more in terms of currency reform, though he also told Hu that the Chinese Government's recent move to loosen its exchange rate had been a "good first step" but that more should be done.

    Dealers said the yuan could fall to just below the 8.0900 level next week, but was likely to continue rising in the longer run, with the short-term target seen at 8.0850 in two or three weeks' time.

    Traders said the central bank's permissive attitude Friday encouraged some high quotes in the dying minutes of trade.

    "There were some large-sized quotes posted around 8.0880 for most of the day, suspected as coming from the central bank giving hints to the market of the levels it hoped for," said a dealer at another foreign bank.

    "But the central bank did not directly intervene in the market, and that encouraged some market players to quote high rates for the yuan in the last few minutes of trade," he added.

    Propelled by a strong trade surplus and hard-currency inflow from direct foreign investment, the yuan should see gradual gains in coming weeks, dealers said. But the government was unlikely to allow the currency to rise too sharply, too soon.

    The yuan weakened to 7.3101 against 100 yen Friday versus 7.3065 Thursday, and softened against the euro to 9.9298 from 9.8921, according to the central bank.

    (Source: Shenzhen Daily/Agencies)