SHANGHAI: China's yuan firmed against the dollar for the third straight session on Friday after the central bank fixed its daily guidance rate to more than two-month high, further strengthening views that the yuan will remain stable, traders said.
For the week, the currency is set to rise 0.25 percent if it closes at the current level, reversing the previous week's loss of 0.2 percent.
The People's Bank of China (PBOC) set the midpoint rate at 6.1267 per dollar prior to market open, the highest level since Feb. 6, or 0.06 percent firmer than the previous fix at 6.1305.
The spot market opened at one-month high at 6.1880 per dollar, but surrender some gains during the morning trade to change hands at 6.1928 at midday, still 0.06 percent firmer than the previous close.
"Market sentiment has improved a lot," said a trader at city commercial bank in Shanghai. "That is because the authorities have made it clear that they do not want to see a weakening yuan."
The Chinese currency embarked on a depreciation track after the PBOC surprisingly cut the benchmark one-year interest rate in November. Sentiment had been bearish as the world second-largest economy faltered while the greenback surged on the recovery of the US economy.
Sentiment has altered, however, since the market saw some intervention into trading by the central bank to support the currency in mid-March.
It has since then improved further after Chinese officials, including Premier Li Keqiang, repeatedly underlined the importance to keep the exchange rate stable, traders said.
As such, the currency is likely to move mainly in a range between 6.19-6.21 in the short term, traders forecast.
The offshore yuan was trading 0.02 percent stronger from the onshore spot at 6.1913 per dollar by midday, reversing a recent trend that it had persistently traded weaker than the onshore yuan and an indication of recovering sentiment in overseas markets as well, traders said.
A Reuters poll showed on Thursday that bullish bets on the yuan rose to their largest level since early December, partly supported by officials' bullish statements on the currency.
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