SHANGHAI: China's yuan was little changed on Friday, despite another record-high midpoint setting by the central bank, as the weak economy reinforced the view that the yuan's recent rally is nearly over.
The People's Bank of China fixed the midpoint at 6.1607 per dollar, up 0.01 percent from Thursday's record high. Spot yuan changed hands at 6.1340 at midday, up 0.01 percent from the last close.
The dollar/yuan rate was only 0.43 below the midpoint, compared with a gap of more than 0.9 percent that persisted on most days between the fourth quarter of 2012 and last week.
The central bank has used the midpoint to guide the yuan to multiple record highs since early April, as the government appears to be laying groundwork for a more flexible exchange-rate regime.
"The dollar dropped overnight, so the central bank followed it to set a high midpoint," said a dealer at a city commercial bank in Shanghai.
"But the spot yuan price shows that market players are still hesitant about bidding the yuan higher."
Dealers said they believe the yuan has little potential to rise further in the near term, as the weak Chinese economy cannot support a jump in the currency.
"Market confidence has been hurt by economic data, especially the export data," the city bank dealer said.
In May, China's exports rose 1 percent from a year earlier, much lower than the market expectation of 7.3 percent.
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