The yuan closed up slightly against the dollar in early trade on Wednesday after the People's Bank of China fixed its mid-point at a record high, signalling the government is permitting another leg of yuan appreciation, traders said. The PBOC has engineered several rounds of yuan appreciation against the US dollar since the start of this year as China uses the exchange rate to manage inflation, adjust its economic model and raise the yuan's global status.
Spot yuan closed at 6.3885 per dollar, stronger than 6.3970 at Tuesday's close. It has now appreciated 6.86 percent since it was depegged from the dollar in June 2010 and 3.14 percent so far this year. Before trading began, the PBOC fixed the mid-point at a record high of 6.3896, stronger than Tuesday's 6.3987. The fixing toppled its previous peak of 6.3925 set on Tuesday last week and breached the 6.39/dollar level for the first time.
Offshore, the one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.2850 in late trade, up from 6.2800 at Tuesday's close, with their implied yuan rise in a year's time falling to 1.66 percent from 1.74 percent.
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