The yuan closed two points weaker on Tuesday thanks to a last minute bout of dollar buying, but otherwise hugged the strong side of its trading band over the course of the day. The People's Bank of China (PBOC) set its midpoint at 6.3078 per dollar on Tuesday morning, slightly firmer than Monday's fix, despite a strengthening trend in the dollar index.
Spot yuan opened at the limit of the trading band at 6.2447 in morning trade and mostly stayed there, causing the intra-day graph to resemble a flatline for the large part of the day.
But at 4.17 pm local time, a few bids came in that pushed the exchange rate away from the band, causing the yuan to close at 6.2456, two pips weaker than Monday's close but nine pips away from its strong-side limit.
The dollar/yuan exchange rate is allowed to rise or fall 1 percent from the midpoint each day, and on normal trading days the currency stays within this range.
But in recent weeks the yuan spot rate has constantly bounced along the edge of the strong side trading band, suggesting a misprision of the yuan's proper value.