The yuan closed up slightly against the dollar on Friday as the People's Bank of China set a higher midpoint, but the fixing was near the 6.30 level, underscoring the central bank's preference to keep the Chinese currency in a narrow range. Dealers said spot yuan appeared to be moving in tandem with the mid-point for now as the government seems intent not to let it creep much higher amid uncertainties in the global and domestic economy, and China's exports are at risk of a slowdown.
Spot yuan ended at 6.2982, firmer than Thursday's close of 6.3002. Speculation over policy has surfaced ahead of the start of China's parliament, or National People's Congress (NPC), but few expect any strong policy-boosting measures for the yuan. In the offshore non-deliverable forwards (NDF) market, the benchmark one-year NDFs implied yuan appreciation of 0.29 percent, up slightly from 0.24 percent they implied at Thursday's close.
The yuan was expected to move narrowly around 6.30 against the dollar in the near term, awaiting fresh market leads and the possibility of policy changes after China data next week and the start of China's parliamentary meeting, they said. "The market has no clear direction, so we are waiting for economic data which could give us some hints," said a dealer at a Chinese bank in Shanghai. The central bank set the midpoint at 6.2980, up slightly from Thursday's 6.3016.
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