The yuan was flat against the dollar on Thursday despite the dollar's fall against a basket of major currencies as investors continued to shift toward riskier assets. The US dollar index has shed more than 1.8 percent in the past week as investors dumped the US dollar and flocked to riskier assets like stocks, commodities and higher-yielding currencies.
Spot yuan closed at 6.8294, slightly firmer than Wednesday's close of 6.8288. Before trade began, the Chinese central bank fixed the yuan's daily mid-point at 6.8288 versus the dollar, the reference rate's highest level since May 26 and up from Wednesday's 6.8292.
China has kept the yuan in a virtual 100-pip peg, centering around 6.8300 against the dollar since July 2008, as the global economic crisis slowed its economy significantly. Earlier, it had allowed it to appreciate steadily for three years starting from July 2005. The market was awaiting China's official economic data for August, to be mainly released starting Friday, for hints of possible changes to the country's foreign exchange.
The purchasing managers' index (PMI) for August rose to a 16-month high in August, at 54.0 compared with 53.3 in July, consolidating for the sixth month in a row above the watershed mark of 50. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) rose slightly to 6.7370 bid on Thursday, compared with Wednesday's close of 6.7320.
Twelve-month yuan appreciation implied by NDFs, which moves inversely with the forwards, fell slightly to 1.36 percent measured from the Chinese central bank's daily mid-point, compared with 1.44 percent implied at Wednesday's close.
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