The yuan hit a fresh trading high against the dollar on Wednesday as the People's Bank of China unleashed a new leg of yuan appreciation to help fight imported inflation, traders said. The central bank has engineered a series of record highs for the Chinese currency since the start of this year as a weaker dollar helped send global commodity prices surging, boosting imported inflation for China, the world's fastest growing market for staple goods.
Over the past eight trading days, the PBOC has allowed the yuan's mid-point, or its reference rate from which dollar/yuan can rise or fall 0.5 percent in a given day, to hit record highs nearly every day except for a slight pullback on Tuesday. Spot yuan closed at 6.5340 against the dollar, up from Tuesday's close of 6.5403. The currency hit an all-time high of 6.5317 in late trade, toppling the previous record of 6.5350 hit last Friday and having appreciated 4.50 percent since it was depegged in June 2010, and 0.88 percent so far this year.
Before trading began, the PBOC fixed the yuan's mid-point at a record high of 6.5369, up from Tuesday's 6.5440. The fixing is used by the PBOC to express the government's intentions for the currency. Offshore, one-year non-deliverable forwards were bid at 6.3750 in late trade, down from 6.3840 at Tuesday's close, with their implied yuan appreciation in a year's time rising to 2.53 percent from 2.39 percent.