China's yuan steadied its recent rise on Thursday, despite hitting the strong side boundary for the third straight day, as the central bank set a weaker fix against the dollar. The People's Bank of China set its midpoint at 6.3017 per dollar, slightly weaker than Wednesday's fix of 6.3002. Traders said the central bank was looking to rein in yuan appreciation and that without the central bank's actions the currency would most likely be strengthening further.
"In the market everyone is selling dollars and less people are buying them. It's certainly possible that (without the trade limit), the rate could break the 1 percent barrier," said a Shanghai trader at a Chinese city commercial bank. The central bank widened the trade band limit in April, allowing the exchange rate to rise or fall 1 percent from the mid-point it sets each day.
The currency stuck relatively close to the strong side limit on Thursday - posting its narrowest high/low trading range in over three months - before closing at 6.2405. Thursday was the third straight day that the yuan reached the strong-side limit of its trading band and the fifth time in six trading sessions since it hit the band for the first time last week.