The yuan closed slightly lower against the dollar on Wednesday after trading well below the central bank's midpoint, with traders saying the People's Bank of China (PBOC) had set a high daily fixing for the yuan for political reasons. The PBOC on Wednesday fixed the yuan's midpoint at 6.3004 per dollar, the strongest midpoint since May 11, as US President Barack Obama and his Chinese counterpart Hu Jintao met on the sidelines of a G20 summit in Mexico.
The midpoint is the base rate from which the central bank allows the yuan to rise or fall 1 percent in a single day. Spot yuan closed at 6.3599 per dollar, down slightly from 6.3545 at Tuesday's close. Offshore one-year non-deliverable yuan forward contracts changed hands at 6.4030 on Wednesday afternoon to imply yuan deprecation of 0.67 percent against the dollar in the next 12 months based on Wednesday's sport yuan close.
Offshore spot yuan traded at 6.3610 in late trade, roughly in line with the onshore spot level. A senior US official said earlier that Obama would raise US concerns about the currency during the summit. Washington has pressed Beijing to let the yuan appreciate as US critics say its artificially low valuation hurts American exporters.