The yuan rebounded moderately against the dollar in the spot and offshore forwards markets on Wednesday after the Chinese central bank set a stronger yuan reference rate for the first time in 11 days. Before trading began, the central bank set the yuan's daily mid-point against the dollar higher at 6.8628 against Tuesday's 6.8659, ending a string of 10 weaker mid-points.
"The latest round of global dollar appreciation appears to be losing steam, allowing the central bank to give the yuan a slight boost," said a dealer at a US bank in Shanghai. "But today's mid-point is only slightly higher, which means the central bank isn't yet ready for a fresh leg of yuan appreciation," he said, adding that he expected the yuan to trade mostly sideways through the August 24 end of the Beijing Olympics, a politically sensitive period for China. Spot yuan closed at 6.8570, up from Tuesday's finish of 6.8632, after touching an intra-day high of 6.8504.
Offshore, one-year dollar/yuan non-deliverable forwards were quoted at 6.6065 in late trade, down from Tuesday's close of 6.6255. Their latest level implied yuan appreciation against the dollar of 3.88 percent over the next 12 months from the day's mid-point, against 3.63 percent implied at Tuesday's close.