The yuan closed at a record high against the dollar on Thursday as the People's Bank of China (PBOC) set its yuan midpoint stronger than expected, signalling tolerance for appreciation, traders said. There was little sign of central bank intervention via state-owned banks to boost the yuan, but the PBOC's tolerance of a stronger yuan did encourage companies to keep selling dollars as they have done throughout this week, traders said.
Spot yuan closed at 6.2770 versus the dollar, up from Wednesday's close of 6.2833. It hit an even higher intraday high of 6.2761 in late trade, the strongest since China set up the domestic foreign exchange market in 1994. Several traders said they believed the central bank would allow the yuan to rise no more than 1 percent this year compared to end-2011. That would put the yuan at 6.2322 by the end of the year. Driven by the QE3, the yuan has now risen 0.22 percent versus the dollar so far this year, reversing a fall of 1.6 percent by late July.
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