BEIJING:China’s yuan firmed against the dollar on Friday, encouraged by the central bank setting a stronger midpoint and a rally in the offshore market a day earlier that dealers suspected was instigated by state banks acting at the central bank’s behest.
Traders said they believed Beijing was seeking to steady the yuan after it came under pressure following its abrupt devaluation in mid-August, traders said.
“The central bank has continuously offered dollar liquidity to the (onshore) market of late,” said a trader at a Chinese commercial bank in Shanghai.
“Nobody wants to fight against the central bank, so the market today took cues from the midpoint as well as from yesterday’s unusual yuan appreciation in the offshore market.”
The People’s Bank of China set the midpoint rate at 6.3719 per dollar prior to market open, or 0.08 percent firmer than the previous fix 6.3772.
The spot market opened at 6.3700 per dollar and was changing hands at 6.3731 at midday, or 0.06 percent stronger from the previous close.
Traders said they expected the onshore yuan to move narrowly between 6.35 and 6.4 in the near term.
The offshore yuan staged a correction of 0.2 percent on Friday morning, after suspected rare intervention by Chinese state-owned banks on behalf of the monetary authorities pushed it to strengthen 1.2 percent on Thursday, the offshore rate’s biggest daily gain on record.
