China's yuan edges up

The yuan edged up against the dollar on Thursday after the central bank fixed a slightly stronger midpoint. The People's Bank of China set the midpoint rate at 6.5152 per dollar prior to market open, 0.13 percent firmer than the previous fix of 6.5237. The spot market opened at 6.5227 per dollar and was changing hands at 6.5174 at midday, strengthening 0.18 percent from the previous close.
The yuan inched up 0.1 percent against the euro by midday at 7.2622. It also firmed 0.1 percent against the Japanese yen, hovering at 5.7172 to 100 yen. Traders said they expect that a trade-weighted basket China has launched is likely to have an increasing impact on how the yuan moves. "The market has started to grasp the guidance from the central bank, which is now more based on yuan's value against a basket of currencies," said a dealer at a Chinese commercial bank in Shanghai.
In December, Beijing launched an index on the yuan's exchange rate weighted against a basket of trade-related currencies, a move that will eventually loosen the currency's link to the greenback. On Thursday, Wang Yiming, a senior analyst at the Development Research Centre of the State Council, said the yuan may be stable in the medium term if China's economic fundamentals hold steady and may appreciate over time if reforms progress well and market perceptions change. The offshore yuan was trading 0.05 percent weaker than the onshore spot at 6.5206 per dollar.