The yuan closed down slightly in spot trade against the dollar on Thursday, after at one point trading at a record distance from the official midpoint, as data showing a further contraction in China's factory activity dampened sentiment.
Economic uncertainty at home and abroad have weighed on the dollar/yuan market exchange rate, but the central bank has used a series of midpoint settings stronger than spot prices to signal that it intends to keep the exchange rate relatively stable, traders said.
Spot yuan closed at 6.3642 per dollar, down slightly from Wednesday's close of 6.3599. It touched an intraday high of 6.3610 and a low of 6.3659. The intra-day low of 6.3659 is 0.98 percent away from the midpoint, within 2 basis points of the official trading range limit, the furthest it has traded since the band was widened recently.
Offshore one-year non-deliverable yuan forward contracts changed hands at 6.4030 on Thursday afternoon to imply yuan deprecation of 0.6 percent against the dollar in the next 12 months based on Thursday's spot yuan close. Offshore spot yuan traded at 6.3655 in late trade, roughly in line with the onshore spot level. Regulators loosened the yuan's trading band - the limit it can rise or fall away from the midpoint in a single day - to 1 percent from 0.5 percent in April.
The People's Bank of China (PBOC) on Thursday fixed the yuan's midpoint at 6.3040 per dollar, slightly weaker than Wednesday's 6.3004, reflecting a global dollar rally after the US Federal Reserve delivered another dash of monetary stimulus and said it was ready to do more if necessary.
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