SHANGHAI: The yuan posted its strongest daily gain in a year as the People's Bank of China (PBOC) set a stronger midpoint on Wednesday and big state-owned banks sold dollars, possibly on behalf of the central bank, traders said.
The yuan ended at 6.2294 per dollar, rising 0.33 percent from Tuesday to make its biggest daily rise since March 24. 2014. It was also its highest closing level since Jan. 23 this year.
The PBOC set the midpoint firmer for the second day on Wednesday, at 6.1556 per dollar from 6.1585 on Tuesday.
Also, frequent dollar sales by big Chinese state-owned banks in the past two weeks have led traders to believe the PBOC does not want the yuan to depreciate as quickly as other currencies have against the dollar.
"Now we feel more confident to sell dollars as we know the authorities' attitude," said a trader at a Chinese city commercial bank in Shanghai.
The yuan has been under heavy pressure since late 2014, hit by China's slowing economic growth and weakness in non-dollar currencies.
The PBOC has intervened to control the pace of the yuan's depreciation, partly by using some big state-owned banks to sell dollars to set a floor, traders said.
In late trade on Wednesday, the offshore yuan was trading 0.11 percent weaker than the onshore spot at 6.2360 per dollar.
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