China's yuan fell to one-week low against the dollar on Wednesday, guided by a weaker yuan midpoint the central bank set for the third consecutive day to reflect a rebound in dollar index. But traders said upside pressure on the Chinese currency remains given ample dollar supply from corporates in the domestic market, especially when the spread between onshore and offshore yuan spots is seen widening.
Traders say the People's Bank of China (PBOC) hopes to keep the yuan stable in the run-up to the Communist Party's third plenum meeting to be held from November 9 to 12, and the yuan will have support at 6.10. "Corporate demand to sell dollars is still strong," said a trader at a Chinese state-owned bank in Beijing.
"The gap of the two yuan spots has widened, and that is triggering more dollar sales in the onshore market." Spot yuan traded at 6.0923 near midday, down 0.03 percent from Tuesday's close of 6.0902. The PBOC fixed its official midpoint at 6.1412, down 0.06 percent from the previous day's 6.1373.
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