China's yuan closed up slightly against the dollar on Thursday after the People's Bank of China set a higher mid-point, indicating the central bank was letting the dollar's performance guide the Chinese currency's movements. The PBOC appears to be letting the currency move inversely to the US dollar index, but confining trade to a small range, partly to calm domestic opposition to the yuan's steeper-than-expected rise since its mid-June depegging.
Spot yuan finished at 6.6613 versus the dollar, up slightly from Wednesday's close of 6.6634, and was up 2.48 percent since the PBOC announced a depegging in mid-June. Before the beginning of trade, the PBOC set the mid-point at 6.6691, which was stronger than Wednesday's 6.6786.
The mid-point is a level from which the yuan may rise or fall 0.5 percent against the dollar on a given day. Offshore, one-year NDFs rose slightly to 6.5080 bid from Wednesday's close of 6.4920, with implied yuan appreciation in a year's time falling to 2.48 percent from 2.87 percent shown on Wednesday.
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