The yuan ended at a two-week high on Tuesday, reversing the previous day's losses on the second day of trading after the central bank widened the currency's daily trading band. The yuan closed at 6.3015, 135 pips stronger than Monday's close and its highest close since March 30 as the central bank set a stronger midpoint in response to a fall in the dollar index overnight.
The mid-point for the currency was set at 6.2896 on Tuesday compared with 6.2960 on Monday. Trade was less volatile on Tuesday as compared with Monday, when the yuan moved in a range of 145 pips in a day, the widest since March 26. Trades on Tuesday covered a smaller range of 98 pips.
"People expected more volatility yesterday, so speculative flows were greater," said a trader at a major state-owned bank in Beijing, referring to Monday's intraday movements. The central bank doubled the trading band for the yuan over the weekend, allowing it to trade up to 1 percent either way from its mid-point, compared with the previous limit of 0.5 percent.