The yuan closed little changed against the dollar on Thursday as the People's Bank of China set its mid-point slightly stronger but shy of the fixing's record high during a visit to China by US Vice President Joe Biden this week. Traders said the market was watching the outcome of Biden's visit during which he is expected to discuss currency and debt among other issues with Chinese officials.
Spot yuan closed at 6.3877 per dollar, a shade weaker than 6.3871 at the close on Wednesday, but the currency remained within arm's reach of its record trading high of 6.3820 hit on Tuesday. It has now appreciated 6.86 percent since it was depegged from the dollar in June 2010 and 3.16 percent so far this year. The PBOC surprised the market last week by letting the yuan rise at its fastest weekly pace since the global financial crisis in 2008, sparking speculation that China might widen the yuan's trading band, use the currency as a key tool to fight inflation or let it appreciate versus a trade-weighted basket.
It fixed the mid-point slightly stronger at 6.3942 on Thursday after pulling it back slightly to 3.3996 on Wednesday from Tuesday's record high of 6.3925. The fixing is the central bank's base rate from which the yuan can move 0.5 percent in either direction. Offshore, the one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.2840 in late trade, up from 6.2770 at Wednesday's close. Their implied yuan rise in a year's time fell to 1.75 percent from 1.86 percent.