The yuan hit a record high against the dollar in late trade on Wednesday after the People's Bank of China set its mid-point at an all-time for the fourth straight day. The yuan may rise further in the near-term as China continues to use the currency to help fight rising price pressures, dealers said.
Spot yuan traded as high as 6.4620 versus the dollar on Wednesday, up from 6.4655 at the close on Tuesday. The yuan's previous record high, hit on June 17, was 6.4634. Before trade began, the PBOC set the yuan's daily mid-point at a record high of 6.4683 versus the dollar, only seven pips higher than Tuesday's historical high of 6.4690.
Despite the stronger fixing, its rise lagged a 0.7 percent drop in the US dollar index overnight, signalling the PBOC still aimed to control the pace of yuan appreciation. The Chinese currency trimmed gains to close slightly off its intraday high at 6.4629, having now appreciated 5.62 percent since it was depegged from the dollar in June 2010, and 1.96 percent since the start of this year.
Offshore, dollar/yuan non-deliverable forwards (NDFs) hovered near two-month highs as a struggling stock market and a listless dollar kept players on the sidelines. One-year dollar/yuan NDFs were bid at 6.3770 in late trade compared with the previous close of 6.3840. Their implied yuan appreciation in a year's time rose to 1.43 percent from 1.32 percent.
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