BEIJING: China’s yuan edged up against the dollar on Monday after the central bank set a firmer midpoint and banks sold dollars partly to meet local currency liquidity demand ahead of a long holiday.
The market will be closed for one week starting Thursday for the Chinese National Day break. Yuan liquidity demand in banks typically surges ahead of such a long holiday as residents withdraw savings for tourism and firms make payments for employee benefits.
“Some banks also sold dollars to avoid risk of the potential of dollar weakness during the long break,” said a trader at a Chinese commercial bank in Shanghai.
The People’s Bank of China (PBOC) set the midpoint rate CNY=SAEC at 6.3729 per dollar prior to market open, 0.09 percent firmer than the previous fix 6.3785.
The spot market CNY=CFXS opened at 6.3725 per dollar and was changing hands at 6.3691 at midday, 0.08 percent firmer than the previous close.
Traders said there were few signs of central bank intervention in trading on Monday after the yuan showed signs of stability over the past couple of weeks. Earlier the yuan had slumped after the PBOC surprised the world by abruptly devaluing the currency in mid-August.
