SHANGHAI: The Chinese yuan set yet another record against the dollar on Monday, overturning Friday's all-time high, as the greenback continued to back off from a peak struck in mid-March.
The central bank set the official midpoint at 6.2454 per dollar on Monday morning, its highest level since the domestic forex market opened in 1994. This gave the spot yuan range to close at a new high of 6.1871.
Trading volume was average at slightly more than $12 billion, but the exchange rate moved within a tight range between 6.1889 and 6.1860 per dollar.
Some traders saw the yuan's unusually aggressive performance in recent days as a diplomatic gesture to coincide with the recent visit of US Secretary of State John Kerry to China.
While there is no hard evidence of manipulation, the yuan has in the past strengthened during key diplomatic events with the US, which has long accused Beijing of keeping its currency artificially weak to support exports.
However, data also shows that Chinese corporates' appetite for the yuan remains strong, especially given that the spot rate has been consistently stronger than the midpoint since Sept. 2012.
This, combined with the return of hot-money inflows that began in January, have caused the People's Bank of China (PBOC) to move to hold back the yuan by buying up massive amounts of dollars.
In the first quarter of 2013, the PBOC bought $128 billion worth of foreign exchange, almost as much as it did for all of 2012, to keep the yuan stable in the face of sustained optimism.
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