The yuan firmed on Wednesday amid signs of official support as the central bank set its daily guidance rate at a four-month high, and state-owned banks continued selling dollars, traders said. The People's Bank of China (PBOC) set the daly midpoint rate at 6.1169 per dollar prior to market open, its peak since December 17, 2014, and 0.07 percent firmer than the previous fix 6.1209.
The spot market opened at 6.2041 yuan per dollar and was changing hands at 6.2047 at midday, 0.02 percent stronger from the previous close. Officials including Premier Li Keqiang and PBOC Governor Zhou Xiaochuan have pledged to keep the yuan stable despite pressure to depreciate coming from a sharp slowdown in the Chinese economy and broad dollar strength in global markets. Traders suspected the hidden hand of the PBOC was behind state banks' dollar sales that have helped bolster the yuan since mid-March.
"We see the trend continuing in the near term until major new marking-moving factors set in, such as signs of a stabler economy," said a trader at a European bank in Shanghai. The offshore yuan was trading 0.03 percent weaker from the onshore spot at 6.2065 per dollar.
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