SHANGHAI: China's yuan gained a touch on Thursday as positive trade data helped to reverse a sudden decline in the currency late on Wednesday, but dealers remained cautious amid signs trading in the currency is becoming increasingly volatile.
Spot yuan changed hands at 6.2304 near midday, 0.06 percent stronger than Wednesday's close. The modest rise came despite the People's Bank of China (PBOC) setting its daily midpoint 0.02 percent weaker at 6.1557.
Earlier on Thursday China reported a 0.9 percent year-on-year rise in exports for April, from a 6.6 percent decline in March and beating forecasts for a 1.7 percent decline. The trade surplus more than doubled to $18.45 billion from $7.71 billion in March.
The yuan has gained strongly this week, showing signs of reversing a four-month weakening trend that began in early 2014 and knocked the currency 3.3 percent lower for the year through end-April. That loss erased all its gains from 2013.
"We are in a new era of a managed float, whose main characteristics are 1) a continued preference (for) medium/long-term stability in both the level and the movement of the currency; 2) greater short-term volatility and 3) a long run bias against depreciation," Arthur Kroeber and Chen Long of GaveKal-Dragonomics, a Beijing-based macroeconomic research firm, said in a note on Wednesday.
Recent comments by the PBOC have supported the idea of greater volatility.
After strengthening to a three-week high of 6.2181 on Wednesday morning, the yuan fell sharply in the afternoon to close at 6.2343. The currency recouped some of those losses on Thursday but remains weaker than Tuesday's closing level.
The PBOC on Wednesday posted the midpoint's largest one-day gain in four weeks, largely in response to an overnight fall in the dollar's value against other global currencies.
The central bank typically fixes a higher value for the yuan when the dollar falls in an attempt to keep the yuan in line with other non-dollar currencies.
Thursday's weaker midpoint came in response to a recovery in the dollar overnight.
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