The yuan pulled back slightly against the dollar on Friday in both the onshore spot and offshore forwards markets as the People's Bank of China fixed a weaker mid-point after setting a slew of record high fixings. The central bank let the mid-point hit a series of new highs in the past two weeks but rises were only marginal, a signal the government may want a more measured pace of appreciation.
As the week-long Lunar New Year holiday approaches, Friday's fixing means the PBOC may keep the yuan in a narrow range, stronger than or around 6.60 per dollar, ahead of the break which starts next Wednesday, traders said. Offshore, benchmark one-year dollar/yuan non-deliverable forwards were bid at 6.4560 in late trade, up from 6.4500 at Thursday's close. Their implied yuan appreciation in a year's time fell to 2.13 percent from 2.22 percent.
Spot yuan closed at 6.5860 against the dollar compared with 6.5820 at Thursday's close. It has now risen 3.64 percent to the dollar since its mid-June depegging. Before trading started on Friday, the PBOC fixed the yuan's daily mid-point versus the dollar at 6.5930.
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