Buoyed by positive economic data, China's yuan rose to a record high on Monday as persistent dollar selling by Chinese corporates drove the spot rate to its maximum daily limit after the central bank set an unusually strong midpoint rate. The People's Bank of China (PBOC) fixed the midpoint at 6.2920 per dollar - the strongest fix since May - and sharply up on Friday's midpoint of 6.3012.
But the market was even more bullish than the central bank, as it has been for nearly a month now, and the spot yuan rate swiftly hit the 1 percent limit of its trading band to repeatedly trade at or around 6.2291 against the dollar until the close, for a gain of 0.25 percent on the day. Under China's managed float, the dollar/yuan rate is allowed to diverge 1 percent in either direction from the official midpoint each day.
Monday's market open, traded levels and the record close marked the strongest trading day since China opened its domestic currency market in 1994. Traders said that positive domestic data, including stronger-than-expected export growth and recent purchasing manager index (PMI) figures, had boosted already strong confidence in the yuan.