The yuan closed firmer against the dollar on Monday, hitting its highest intraday level since late May, despite weak Chinese manufacturing data as signals from the cental bank that it intends to keep the yuan stable helped buoy the currency, traders said.
Before trading began, the People's Bank of China fixed its daily midpoint at 6.3415, slightly stronger than Friday's 6.3449 in line with the dollar weakening in global markets on Friday but also reflecting the central bank's aim of holding the yuan stable, traders said.
Spot yuan closed at 6.3407 per dollar, up from Friday's close of 6.3484. In intraday trading, it hit a high of 6.3385, its strongest level since May 24 and above the PBOC's midpoint for the first time since May 17. The yuan has been under bearish pressure, partly from corporates hoarding dollars, and the yuan had eased this year, sinking by as much as 1.6 percent in late July when the dollar index hit a two-year high.
But the yuan has regained some ground since, leaving the yuan down 0.7 percent for the year to date. "With corporations having become less interested in dollars, there is now a rough balance of dollar supply and demand," said a trader at a Chinese commercial bank in Shanghai. "Supported by the PBOC's stable midpoint in recent weeks, spot yuan should be able to stabilise in coming weeks."
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