Spot yuan hit a new six-week low against the dollar on Friday after the central bank fixed a weaker mid-point, in line with expectations as the dollar hovered at three-week highs versus a basket of currencies. Before trading began, the PBOC fixed the mid-point, or its daily reference rate against the dollar, at 6.8035, weaker from Thursday's 6.8015 and a fresh seven-week low.
The lower fixing comes as the dollar gained globally overnight with the euro and the yen falling. Spot yuan clawed back from losses in early trade to 6.7957 per dollar, 0.45 percent up against the dollar since the Chinese currency was depegged on June 19. It dropped to as low as 6.7996 in the early session.
But traders doubt the PBOC will continue holding the fixing above 6.80 for an extended period, and may resume appreciation in the yuan within the year. Offshore, benchmark one-year dollar/yuan non-deliverable forwards hit an intraday peak of 6.6900, its highest level since June 25 before falling back to 6.6850 later on Friday. The NDFs actually imply an increase in appreciation expectations to 1.77 percent from Thursday's 1.74 percent.
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