The yuan hit a more than one-month low against the dollar in benchmark offshore one-year non-deliverable forwards (NDFs) on Wednesday as the US dollar jumped versus major currencies, dealers said. The dollar index hit a more than four-week high of 76.183 during overseas trading hours, although by late Wednesday it had eased to 75.881.
Benchmark one-year dollar/yuan NDFs hit an intraday high at 6.6580 bid, their highest since November 4 and up from Tuesday's close of 6.6420. Yuan appreciation in 12 months implied by the dollar/yuan NDFs, calculated from the Chinese central bank's mid-point, fell to 2.55 percent late on Wednesday, its lowest level in more than a month and down from 2.80 percent implied at the close on Tuesday.
"The market expects the dollar may rise further this month," said a dealer at a European bank in Shanghai. "That guided the NDFs higher today." The yuan was steady on the spot market and dealers said the Chinese central bank did not appear ready to allow the currency to appreciate despite mounting pressure for it to rise.
Zhu Min, vice governor of China's central bank, said on Wednesday that exchange rates should not play a primary role in efforts to rebalance the global economy. Spot yuan closed at 6.8276 per dollar, little changed from 6.8275 at the close on Tuesday.
The Chinese central bank fixed the yuan's daily mid-point at 6.8279 versus the dollar, virtually flat with Tuesday's 6.8277. Zhu Min was cited as saying late on Tuesday that China was experiencing a clear V-shaped economic recovery and the economy was well on track to meet or exceed the government's target of 8 percent growth this year.
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