More than a week after China's landmark 2.1 percent revaluation, the yuan is still hugging tight bands around a US dollar peg, and US senators are warning afresh of trade trouble for Beijing unless it lets the currency rise further.

Although most economists are confident the yuan will edge higher, they said divisions within Beijing and the deliberately ambiguous nature of the new forex regime made it treacherous to predict the pace of change.

``What we are currently in is some sort of unknown halfway house between what we had before and a trade-weighted or a basket-management system. At the moment we have more questions than answers,'' said Robert Rennie, chief currency strategist at Westpac Bank in Sydney.

In an attempt for some clarity, the People's Bank called in some top economists the day after it replaced the yuan peg to the dollar with the following mouthful: a ``managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies.''

One of those invited, Liang Hong of Goldman Sachs in Hong Kong, said she got the impression from assistant governor Yi Gang the central bank had been authorized to let the yuan move in a given range but that any rise in the first month would be very limited.

``The sense I got out of that meeting is that 2 percent clearly seems to be a compromise,'' she said. ``The central bank would have liked to move a little more, but other ministries in the cabinet probably want a more conservative, gradualist approach.''

Gradualism is certainly what the markets have got so far. The yuan has moved less than 0.04 percent up and down from the rate of 8.11 per dollar to which it was revalued after more than eight years virtually fixed near 8.28.

To be sure, the past week's range is much wider than the span of 8.2763 to 8.2765 that used to prevail on most days beforehand. But the bank is far from having exploited the 0.3 percent daily margin built into the new system.

``The exchange rate today is still effectively fixed rather than floating, and it should remain so for a good while to come,'' said Jonathan Anderson of UBS in Hong Kong.

That would not go down well with US senators Charles Schumer and Lindsey Graham, who last week renewed a threat to press ahead with legislation that would impose a 27.5 percent tax on mainland imports unless China built on the initial revaluation.

One strand of speculation is Beijing will throw a bone to Washington by permitting another appreciation when Congress returns from its summer recess in September, when President Hu Jintao visits the United States. Yet economists said the clear message is that domestic imperatives, primarily the fear of job losses, are driving currency policy.

According to this thinking, policy makers, banks and firms will be given time to adjust to mini-moves before being exposed to the full blast of market forces and bigger currency swings.

That is why central bank officials stress that the next stage of reform is to introduce more hedging instruments.

Liang expects China within six months to have a much more developed and transparent forward market so firms can hedge their exposure. She said Beijing is also likely to loosen its grip on the yuan a bit by introducing a system of market makers for spot dollar/yuan.

Even with an emphasis on gradual adjustment, Gregg Gibbs of Royal Bank of Canada in Sydney expects the yuan to rise to 7.8 per dollar by the end of 2005 and 7.4 by the end of next year.

Jean-Christophe Iseux, an adviser on foreign economic cooperation to the Communist Party, expects an appreciation of no more than 5 percent over the next year, roughly what offshore derivatives markets are pricing in.

Jim Walker of CLSA said that a managed float like China's is effectively a regime fixed by the government and the central bank, not by the market.