The yuan firmed mildly against the dollar on Wednesday as the central bank continued to nudge the official midpoint upwards as the dollar index flattened out. The central bank set the official midpoint at 6.3140 per dollar, following its custom of moving the fixing up or down in response to moves in the dollar index.
For a third consecutive day, the dollar slipped slowly away from the two-year high it hit against a basket of currencies on July 12. However, spot prices showed increasing resistance to the strengthening midpoint, opening at 6.3718 and moving only a few points through the day to close at 6.3702.
The spread between the midpoint and the spot has widened steadily in July and stood at 562 points at the close, near its all-time record of 595 points away from the midpoint, set in June.
Offshore yuan markets also remain flat. Non-deliverable one-year forward contracts traded in Hong Kong changed hands at 6.4150 as mainland markets closed, implying depreciation of around 0.6 percent in one year. However, analysts caution that differing interest rates in Hong Kong and the mainland account for part of the discrepancy in rates. Offshore yuan deposit exchange rates remained tightly bound to the onshore rate at 6.3710.