China's yuan edged up against the dollar on Friday and is set for a mild weekly gain after the central bank fixed its daily midpoints stronger over the past week. Beijing has also taken further steps to control the country's capital outflows to support the Chinese currency. "The market remained flattish, with all eyes on the central bank's guidance of late," said a dealer at a Chinese commercial bank in Shanghai.
"Even if there will likely be more forex demand next week, the yuan might not swing wildly," said the same trader in Shanghai. Traders expected increased foreign currency purchases by corporates and individuals next week to meet requirements ahead of the Lunar New Year, which falls on February 8 this year. The People's Bank of China (PBOC) set the midpoint rate at 6.5516 per dollar prior to market open, 0.02 percent firmer than the previous fix 6.5528. The midpoint has been fixed firmer every day over the past week.
In line with the midpoint, the spot market opened at 6.5757 per dollar and was changing hands at 6.5740 at midday, 0.02 percent firmer than the previous close. It is set to firm slightly by 0.1 percent for the week if it closes at the midday level. On Friday, the dollar index stood at 98.628, after it fell broadly on Thursday after a plunge in US durable goods orders that pointed to weakening US growth.
Offshore yuan was trading 0.65 percent softer than the onshore spot at 6.6173 per dollar. The onshore yuan weakened 0.3 percent against the euro to 7.1984. It firmed 1.0 percent against the Japanese yen, hovering at 5.4842 to 100 yen after the Bank of Japan stunned markets by adopting negative interest rates in its boldest step yet to reinflate the long-languishing economy.