The yuan closed near its limit down level against the dollar from the central bank's mid-point on Thursday but remained marginally up so far this month as the government showed its determination to dampen speculation of yuan depreciation.
The currency, which hit the lower end of its trading range in intraday trading, has hit limit down nearly every day in December as global dollar strength and yuan short selling by offshore investors made banks and their clients buy more dollars in the domestic market, the China Foreign Exchange Trade System.
"Yuan pricing had largely been a business of the onshore market until recent months when some offshore investors began to short China, short the yuan," said a dealer at a European bank in Shanghai. On Thursday, the central bank fixed the dollar/yuan mid-point at 6.3421, weaker than Wednesday's 6.3396 but lagged a 0.4 percent rally in the US Dollar Index overnight.
Spot yuan closed at 6.3735 against the dollar, trading mostly at its limit down level of 6.3738. It touched a high of 6.3728 and slipped from 6.3706 at the close on Wednesday, as its fall was confined by the PBOC's mid-point. One-year NDFs rose slightly to 6.4470 on Thursday against 6.4430 at the close on Wednesday.
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