China's renminbi edged higher on Friday, ending the week close to where it started, as stock and bond markets stabilised after a month of dramatic losses.
Shanghai's benchmark Composite index has lost nearly 7% since mid April as Chinese financial authorities have acted to bring the country's credit boom under control.
While it has curbed the use of borrowed cash for investment by China's legion of retail investors, capital controls have also been introduced to help curb outflows from international investors.
"Capital controls have been effective in containing outflows from China, and significant selling pressures on the renminbi have been deterred," said Ronald Man at Bank of America Merrill Lynch (BAML).
The renminbi had gained nearly 1.3% since the start of the year as the People's Bank of China (PBoC) was suspected of using stronger daily fixings – the middle point of the currency's daily trading band – to carefully manage its path higher.
Such a move would help investor confidence while the leverage clampdown takes its toll on the equity and bond markets.
Many analysts believe the market reaction has been overdone. While China's retail investors make up the largest share of all market participants – some believe up to 80% – they account for just 5% of overall market value.