The yuan edged lower on Wednesday as the impact of the central bank's recent widening of the currency's daily trading band faded and the market settled into its familiar range. Spot yuan traded at 6.3051 per dollar at midday, 36 pips weaker than Tuesday's close, after the central bank set a midpoint of 6.2948, 52 pips weaker than Tuesday's fix.
The central bank's announcement on Saturday of wider daily trading band of 1 percent from 0.5 percent has so far had little impact on the market.
"The first day's volatility was a bit more than usual. But in the last two days the market has digested the information, so things are relatively stable," said a trader at a Chinese joint-stock bank in Shanghai.
In the medium term, traders say, the wider trading band will lead to greater volatility intraday and over longer stretches.
For the moment, however, the market appears to have settled firmly in a range around 6.29-6.32, so traders are not inclined to speculate on broad movements. "Supply and demand in the market are in a fairly balanced place," said a trader at a European bank in Shanghai.
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