China's yuan edged up against the dollar on Thursday after the central bank set a stronger midpoint for only the second time this month. The People's Bank of China (PBOC) set the midpoint rate at 6.3791 per dollar prior to market open, 0.01 percent firmer than the previous fix 6.3796. The PBOC has broadly guided yuan guidance weaker in November. The spot market opened at 6.3820 per dollar and jumped to 3.745 soon after in response to the stronger fix.
It was changing hands at 6.3781 at midday, 0.11 percent firmer than the previous close. The spot rate is currently allowed to trade with a range 2 percent above or below the official fixing on any given day. "Obviously the central bank wanted to ease the strengthening dollar purchases of late and prop up the yuan's value," said a trader at a foreign bank in Shanghai.
"Investors thus held back buying dollars under the central bank's guidance." The move by the PBOC suggested Chinese regulators still harbour concerns about pressures on the currency to depreciate, with the International Monetary Fund set to decide on November 30 whether to add the yuan to the Special Drawing Right's basket. China has moved to restrict trade of offshore yuan at clearing banks, sources told Reuters on Wednesday, tightening capital controls. The offshore yuan was trading 0.49 percent weaker than the onshore spot at 6.4094 per dollar.
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