China's yuan firmed on Thursday as the dollar was broadly weaker after the release of minutes of the Federal Reserve's July meeting that showed policymakers opposed to a near term hike in interest rates outnumbered those in favour of one. The People's Bank of China set the midpoint rate at 6.6273 per dollar prior to market open, weaker than the previous fix 6.6056.
The spot market opened at 6.6260 yuan per dollar and was trading at 6.6262 at midday, 77 pips away from the last close and making the yuan 0.02 percent stronger than the midpoint. The spot rate is currently allowed to trade with a range 2 percent above or below the official fixing on any given day. The offshore yuan was trading at 6.6324 per dollar, 0.09 percent weaker than the onshore spot.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.764, 2.02 percent weaker than the midpoint. One-year NDFs are settled against the midpoint, not the spot rate.
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