The yuan closed up against the dollar on Monday for a third straight day after the People's Bank of China fixed a stronger mid-point, signalling it had ended a round of moves to dampen yuan appreciation speculation. Until last Thursday, the PBOC set a slew of weak fixings, shrinking the yuan's gain to as little as 0.2 percent since the central bank depegged the yuan from the dollar on June 19.
The PBOC set the mid-point, or its reference rate from where the yuan can rise or fall 0.5 percent on the dollar each day, at 6.7838 on Monday, up from Friday's 6.7973, the third straight trading day that it has allowed the yuan to rise.
Guided by the central bank, spot yuan closed at 6.7874, up from Friday's close of 6.8038. But the yuan's gains over the past three days have fallen short of wiping out its losses since August 9, when the Chinese currency reached 6.7644 versus the dollar, its strongest since the landmark July 2005 yuan revaluation.
The yuan is now up 0.57 percent from when it was depegged, compared with appreciation of as much as 0.91 percent on August 9. The yuan is likely to move mainly around 6.80 in coming weeks in relatively volatile trade between the post-revaluation high and 6.8262, its pre-depegging level.
Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.7000 late on Monday, unchanged from Friday's close. Their implied 12-month yuan appreciation fell to 1.25 percent from 1.45 percent at Friday's close due to Monday's sharply stronger spot yuan mid-point.