* Riksbank says "highly prepared" to weaken crown if need be
* Dollar inches down against euro
* Yuan rebounds after hitting 4-year low of 6.60/dollar
(Recasts after Riksbank statement)
By Patrick Graham
LONDON, Dec 30 (Reuters) - Sweden's crown fell back from
nine-month highs on Wednesday as the central bank warned it was
"highly prepared" to intervene and weaken the currency to
bolster very low inflation.
The dollar lost ground again to the euro, adding to a weak
end to the year that has seen it fall almost 5 percent in just
under a month as investors took profit on its double-digit rise
since January.
Analysts say those falls look chiefly the result of a thin
holiday market and the greenback continued to make progress
against the Chinese yuan and Asia- and oil-dependent majors like
the Australian dollar and Norwegian crown.
Sterling, driven to an 8-month low on Tuesday by fears over
Britain's referendum on leaving the European Union, inched down
0.1 percent to $1.4799.
The Swedish crown fell around a third of a percent against
both the euro and dollar after the statement by Governor Stefan
Ingves mid-morning. Citi strategist Josh O'Byrne said the move
should squeeze out some "short" bets against the euro.
"This should reinforce a range in EURSEK for now, centered
between 9.20-9.30. Shorts should lighten up, awaiting better
levels," he said.
"We have been bullish on the crown, seeing growth and
inflation conditions over the next 12 months as positive drivers
for the currency. The theme however is one that should develop
slowly."
By 1238 GMT, the crown traded 0.3 percent weaker on the day
at 9.1800 crowns per euro. EURSEK=D3
Offshore rates for the yuan CNH= had steadied at 6.5705
yuan by lunchtime in London, having briefly breached 6.60 yuan
per dollar for the first time since the second half of 2011.
That move took the Chinese currency past lows hit around a
one-off devaluation in August before a sharp reverse mid-morning
in London. Dealers declined to say if there had been much impact
on the market from the Chinese central bank's suspension of at
least three foreign banks from conducting some foreign exchange
business until the end of March.
Included among the suspended services are liquidation of
spot positions for clients and some other activities related to
cross-border, onshore and offshore businesses, three sources who
had seen the suspension notices told Reuters.
Against the euro, the dollar fell just under 0.2 percent to
$1.0929. EUR=EBS It was roughly steady on the day at 120.49
yen. JPY=EBS
While the consensus among major bank analysts on the dollar
is still for it to gain against peers such as the euro and yen
in 2016, such forecasts are less widespread than a year ago and,
with some exceptions, stop short of predicting a rise to parity
with the euro.
BNP Paribas (PA:BNPP) strategist Michael Sneyd said the dollar's
progress against other majors had lagged significantly behind
moves up in U.S. bond yields since the Federal Reserve delivered
its first rise in official U.S. interest rates on Dec. 16.
"We would put that down to most market participants being
out of the market at the moment. That may change next week," he
said. "Long dollars still seems to be a stand out opportunity
particularly with the euro almost at $1.10 and the yen at 120
(per dollar)."
(Editing by Janet Lawrence)