The yuan closed below its top-end limit for the first time this week on Friday, as the central bank appeared to intervene to boost liquidity after a week of anaemic volumes. The yuan closed at 6.2267 per dollar, marginally firmer than Thursday's close of 6.2281.
China's central bank was suspected of intervening in the last half hour of trade, breathing life into a market that had been virtually paralysed for weeks due to a lack of dollar buyers. The closing level was four pips weaker than the strongest level allowed by the central bank's daily midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 1 percent from the midpoint it sets each morning.
Dollar bids were nowhere to be seen this week as the 1 percent band prevented dealers from quoting prices that would attract would-be buyers. The yuan had hit its limit for 24 of the last 27 sessions. But volume surged in the last 30 minutes of trade, as traders said dollar bids suddenly re-appeared. Daily turnover on Friday totalled $13.9 billion following a week in which it hovered between 4 and 6 billion. Almost all of it occurred in the final half hour.