China's currency was flat on Thursday, extending the weeks-long deadlock between market forces pushing for appreciation and the central bank's determination to hold the yuan steady. The spot rate ended the day exactly where it was at midday - 6.2281 per dollar - and nearly unchanged from Wednesday's close of 6.2273. The 6.2281 level was the strongest permitted by the central bank based on Thursday's midpoint of 6.2910, marginally weaker than Wednesday's fix of 6.2902.
The People's Bank of China (PBOC) allows the exchange rate to rise or fall 1 percent from the midpoint it sets each morning. In recent weeks, the PBOC has held its midpoints resolutely steady, despite market pressure for yuan appreciation. That has created a deadlock in which the yuan has hit its top-end limit for six straight sessions and 23 of the last 26.
Trading volumes have suffered, as would-be dollar buyers don't want to do transactions at the price available. Average daily turnover has plunged from $13.9 billion in the first three quarters of the year to less than $6 billion in the last five sessions. Overnight forward yuan is now being quoted at a slight premium to the spot rate, even as longer-term forwards continue to trade at a discount.