Spot yuan hit its strongest rate against the dollar since early July on Thursday, as banks in China moved to reduce their exposure to the risk of further slides in the dollar. The dollar index has flattened out in recent trading days and China's central bank has continued its habit of setting the midpoint in line with the dollar index's movements, fixing the midpoint at 6.3387, slightly weaker from Wednesday's fixing of 6.3378.
However, spot yuan prices firmed rapidly in morning trading, at one point trading at 6.3504, only 0.18 percent away from the midpoint - the closest it has been to the fix since late May and its strongest point since July 5. "The yuan broke through its resistance point of 6.3580 today on dollar-selling by foreign banks, which were taking stop-loss positions around 6.3520 per dollar," said a trader at a joint-stock bank in Shanghai.
The offshore one-year non-deliverable forward contract traded at 6.4265 per dollar at the close. The one-year onshore forward was at 6.4649. The spread between onshore and offshore spot yuan (CNH) has widened slightly this week, but remains relatively close to the onshore price at 6.3635.