SHANGHAI: China's yuan ended slightly stronger on Wednesday, despite data showing declining capital inflows, as dealers reported continued strong demand for the currency.
Spot yuan closed at 6.1269 per dollar, 0.03 percent stronger than Tuesday's close.
The gain in the spot rate contrasted with the central bank's daily midpoint, which was set at 6.1677 on Wednesday, 0.04 percent weaker than Tuesday's fix.
Data out Wednesday showed that capital inflows in the first quarter were smaller than originally believed.
The State Administration of Foreign Exchange (SAFE) revised down China's first-quarter current account surplus to $47.6 billion from $55.2 billion, while the capital and financial account surplus was changed to $90.1 billion from $101.8 billion.
The dollar/yuan rate was 0.66 below the midpoint in the early afternoon. While this gap was still smaller than one of more than 0.9 percent that persisted most days between the fourth quarter of 2012 and late last month, it has widened again after narrowing to as little as 0.3 percent last week.
That indicates that some appreciation pressure has re-emerged after fading last week.
"Overall, the market is still demanding yuan," said a dealer at a major state-owned bank in Shanghai.
He and other dealers said the yuan is likely to move sideways in the near term, as some corporate clients listed in Hong Kong or other markets will need to purchase foreign currency to offer dividends around end-June and early July. That will offset some of the current yuan demand.
"The recent level is quite stable and there is still no expectation of yuan depreciation," the state-owned bank dealer said.
"If there is no demand for dividends and position adjustment by banks in June, the yuan should continue to gradually rise. I still expect further rises around end-July and August," he said.
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