The yuan closed lower versus the dollar on Wednesday, weakening 0.61 percent this month as the People's Bank of China (PBOC) pushed forward with more active two-way trading of the Chinese currency via its mid-point. While the PBOC has talked about a widening of the yuan/dollar trading band for years, real two-way trade has been slow taking off.
This time, dealers say the central bank appears to be encouraging the normally tightly-managed Chinese currency to trade over a wider range. The mid-point has had its second-biggest 10-day loss since China established a domestic foreign exchange market in 1994.
Spot yuan closed at 6.3323 against the dollar, weaker than 6.3270 at Tuesday's close and dropping 0.61 percent from 6.2936 at the end of last month - about the same amount of loss the PBOC has permitted for its midpoint in the same period of time.
Before Wednesday's trading began, the PBOC set the yuan's midpoint at 6.3328, weaker than Tuesday's 6.3259. The PBOC's fixing has lost 0.68 percent over the past 10 trading sessions. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) started to imply yuan depreciation late on Tuesday and implied a yuan fall of 0.16 percent in late afternoon trade compared with a fall of 0.10 percent implied at Tuesday's close.
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