China's yuan firmed against the US dollar on Thursday even as the People's Bank of China set a weaker midpoint for the 10th consecutive day. Traders said large Chinese banks had offered dollars in the market in an apparent effort to ensure the yuan does not depreciate too quickly.
The People's Bank of China set the midpoint rate at 6.8692 per dollar prior to market open, weaker than the previous fix 6.8592. The spot market opened at 6.8760 per dollar and was changing hands at 6.8692 at midday, -69 pips firmer than the previous late session close and flat against the midpoint. The spot rate is currently allowed to trade with a range 2 percent above or below the official fixing on any given day.
The offshore yuan was trading -0.24 percent weaker than the onshore spot at 6.8855 per dollar. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 7.0635, -2.75 percent away from the midpoint.