The yuan firmed slightly by mid-afternoon on Monday, as Chinese corporates reverted to selling dollars regardless of the central bank trying to guide the Chinese currency into a lower trading range. Spot yuan stood at 6.2345 per dollar by early afternoon, a touch firmer than Friday's close of 6.2356, but right at the top of the daily trading range set by the central market, as pressures for the yuan to appreciate reappeared.
After the yuan hit a record high last Wednesday the central bank had appeared to get the upper hand, as Chinese corporates began buying dollars again following a long gap. But on Monday it was clear the market remained reluctant to follow the central bank's lead as the yuan strengthened after opening at 6.2362 per dollar.
Under China's managed float regime, the dollar/yuan exchange rate is allowed to diverge away from the official midpoint rate by 1 percent in either direction on any given trading day. On Monday, the central bank set its midpoint for the daily trading range at 6.2975, compared with Friday's fix of 6.2945. It was the third consecutive day that the central bank had set a weaker mid-point. Soon after the open the yuan began hitting the top edge of its trading band, signalling a return to the stalling pattern that dominated most of last week's trade.
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