China's onshore yuan firmed against the dollar on Tuesday after suspected intervention by the central bank, a day after a slide in the country's forex and stock markets sparked a panicky global sell-off. The People's Bank of China set the midpoint rate at 6.5169 per dollar prior to the market open, weaker than the previous fix of 6.5032. It was the weakest level since April 2011.
In the spot market, the yuan strengthened immediately after the opening on Tuesday and was changing hands at 6.5198 near midday, 140 pips stronger than the previous close and 0.04 percent weaker than the midpoint. The spot rate is allowed to trade with a range 2 percent above or below the official fixing on any given day. Onshore yuan closed at 6.5338 on Monday.
In the offshore market, where the central bank usually takes a hands-off attitude, the yuan hit 6.6446 in early trade, the lowest in more than four years. It traded 1.71 percent weaker than the onshore spot at 6.6335 per dollar near midday. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.853, or 4.90 percent weaker than the midpoint.
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