The yuan fell to a multi-month low against the dollar in the benchmark offshore non-deliverable forwards (NDFs) on Wednesday, pressured by a steep rise in levels of onshore forwards. Benchmark one-year dollar/yuan NDFs rose to an intraday high of 6.7950 bid in late trade, their highest level since April 21 and up from Tuesday's close of 6.7740.
Twelve-month yuan appreciation implied by the NDFs, which move inversely with the levels of the forwards, fell to only 0.58 percent, measured from the Chinese central bank's daily mid-point, its lowest since late March and down from 0.87 percent implied at Tuesday's close.
"The NDFs were recently affected by a spike in the levels of the onshore forward market," said a dealer at a European bank in Shanghai. He added that the recent slight strengthening of the dollar on global markets also helped push up the NDFs' levels.
Onshore, the key one-year dollar/yuan forwards rose to a six-week intraday high of 6.8470 bid on Wednesday, up from Tuesday's close of 6.8386. On the spot market, the yuan closed at 6.8329 versus the dollar, down slightly against Tuesday's close of 6.8327.
The fall was guided by the Chinese central bank, which fixed the yuan's daily mid-point at 6.8336 on Wednesday, down marginally from Tuesday's reference rate of 6.8326 and reflecting a rise in the dollar index overnight.
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