Spot yuan closed up on the dollar on Tuesday and scored its second biggest single-day rise since its mid-June depegging as the market remained bullish over the short-term prospect of Chinese currency appreciation.
Amid a slew of political events in November that are set to raise the yuan's upside potential, the market shrugged off a weaker mid-point fixing by the People's Bank of China before trading started, a move apparently aimed at dampening enthusiasm for another round of yuan appreciation.
That move has come about from increasing expectations for yuan appreciation in light of heavy US pressure on the Chinese authorities, particularly ahead of US mid-term elections. The yuan closed at 6.6777 versus the dollar, up 0.36 percent from Monday's close of 6.7015, the biggest one-day gain other than June 21 - the first trading day after the PBOC depegged it from the dollar on June 19. Since the depegging, the yuan has risen 2.22 percent. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) fell to 6.4450 bid late on Tuesday from 6.4490 at Monday's close, with their implied 12-month yuan appreciation rising to 3.84 percent from Monday's 3.72 percent.