China's yuan inched up against the US dollar on Thursday after the central bank set a stronger official midpoint and companies sold the greenback. Trade frictions with the United States remained a key market focus, with traders awaiting news from a second round of high levels talks in Washington. The White House's harshest China critic has been relegated to a supporting role, senior Trump administration officials said on Wednesday.
Prior to the market opening, the People's Bank of China set the midpoint rate at 6.3679 per dollar, 66 pips or 0.1 percent firmer than the previous fix of 6.3745. In the spot market, the onshore yuan opened at 6.3658 per dollar and was changing hands at 6.3601 at midday, 104 pips firmer than the previous late session close and 0.12 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 98.79, firmer than the previous day's 98.7. The offshore yuan was trading 0.13 percent firmer than the onshore spot at 6.3519 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 6.4605, 1.43 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate. Foreign direct investment in China barely rose in the first four months of the year, while non-financial outbound investment climbed nearly 35 percent from a year earlier, data showed earlier in the day.