Yuan hits fresh eight-month high

The yuan reached its highest level against the dollar in eight months in the benchmark offshore non-deliverable forwards (NDFs) on Wednesday after the US currency tumbled on global markets. The yuan's rise in the NDFs also reflected renewed international pressure for it to rise as US lawmakers planned new legislation to push for further yuan appreciation.
But in a sign that Beijing may not be ready to allow the yuan to rise sharply in the near term, the Chinese central bank on Wednesday set the yuan's daily mid-point weaker than where the market expected. It failed to reflect the dollar's global weakness and guided spot yuan slightly lower.
"The central bank appears to have ignored the dollar's weakness on global markets," said a dealer at an Asian bank in Shanghai, adding that it seemed as if the central bank might not allow the yuan to move stronger than 6.8200 this week. One-year dollar/yuan NDFs fell to an eight-month low of 6.7025 bid on Wednesday.
Its lowest level since September 2, and implied yuan appreciation of 1.81 percent over the next 12 months from the day's spot mid-point, the strongest implied yuan appreciation since early September. This was the second time the yuan has hit an eight-month high in the benchmark NDFs since the start of this month.
The US dollar index hit a four-month low in Asian trade on Wednesday, facing renewed selling amid a recovery in risk appetite that has curbed safe-haven buying of dollars. In the United States, a bipartisan group of US lawmakers planned to make another effort this year to curb imports from China by allowing US companies to seek duties on goods from countries that allegedly manipulate their currency.
Senator Debbie Stabenow, a Michigan Democrat, and Senator Jim Bunning, a Kentucky Republican, planned to introduce legislation on Wednesday. "By illegally subsidising its exports through the undervaluation of its currency by 30 percent or more, China has distorted their gains from trade, created barriers to free and fair trade, harmed US industries, and has destroyed millions of US jobs," they said in a press release.