China's yuan firmed against the dollar on Thursday as sliding US bond yields kept the greenback under pressure, though traders say talk of further falls in the Chinese currency may intensify over the short term. Traders said the Chinese currency market was being "heavily" affected by volatility in the dollar after the Lunar New Year holiday, with lingering caution about the outlook for the yuan keeping its upside contained.
The People's Bank of China set the yuan midpoint rate at 6.8710 per dollar prior to market open, firmer than the previous fix at 6.8849. The spot market opened at 6.8720 per dollar and was changing hands at 6.8682 at midday, 33 pips firmer than the previous late session close and 0.04 percent stronger than the midpoint. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.23, weaker than the previous day's 95.27.