The yuan on Friday ended two notches stronger at 8.2763 per US dollar, near the stronger end of its managed trading range. The one-year non-deliverable dollar forward discount versus the yuan stood at 4,550 points, implying a rate of 7.823 yuan per dollar in 12 months' time. Earlier, traders had spotted heavy buying of two- and three-month NDFs after the Financial Times reported the US administration had told senators it expected China to revalue the yuan in August.
Two-month NDFs hit 1,050 points - a level last seen in May and pricing in the yuan at about 8.17 at the end of two months. Three-month NDFs had priced the yuan nearly 2 percent higher at 8.12. One-year implied yuan volatility was traded at 6.5/7.5 percent.
Implied volatility is a measure of how much the options market expects the price of the underlying asset to move during the life of the option. The yuan moves in a band of 8.2760 to 8.2800 enforced by the central bank.
Turnover came to a heavy $1.69 billion on Friday. The yuan strengthened a tad to 7.3930 per 100 Japanese yen from 7.3988, but weakened against the euro to 10.0054 from 9.9926.