China's yuan firmed slightly against the dollar on Wednesday, in part supported by corporate dollar sales after the greenback climbed to one-week highs overnight in global markets. Traders said the market took in stride the larger-than-expected fall in China's foreign exchange reserves reported on Tuesday, noting that outflows appeared to be easing.
Prior to market open, the official yuan midpoint, guided by the People's Bank of China, was fixed at 6.8849 per dollar, the weakest in three weeks, 0.36 percent softer than the previous fix of 6.8604. The spread between onshore and offshore yuan narrowed to around 400 pips on Wednesday morning, with the offshore spot trading 0.66 percent firmer than the onshore spot at 6.8389 per dollar. One-year NDFs are settled against the midpoint, not the spot rate.
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