HONG KONG: China's yuan rose to two-week highs against the dollar on Friday, despite a weaker midpoint fixing, as seasonal dollar demand from companies at the quarter-end has lessened.
The yuan is heading for its best monthly performance this year, as investors optimistic about its appreciation trend have started to return to the market after a sharp fall in the currency earlier this year.
Spot yuan changed hands at 6.2216 per dollar near midday, up 0.06 percent from Thursday's close at 6.2251. It briefly touched 6.2188 in morning trades, the highest level since June 16.
The People's Bank of China (PBOC) fixed the midpoint at 6.1543, 0.01 percent lower than the previous day's 6.1538.
"The yuan broke an important psychological level at 6.2231 in the morning as strong demand to buy dollars from oil companies was almost over," said a trader at a Chinese bank in Shanghai.
"It may test 6.20 next week, but it still depends on the attitude of the central bank," the trader said.
Investor sentiment on most emerging Asian currencies improved over the last two weeks, with the first bullish bets seen on China's yuan in four months as the currency showed signs of stabilising, a Reuters poll showed.
The "redback" has gained 0.4 percent in June, recovering some of the more than 3 percent loss in the first five months of the year.
The yuan's medium-term appreciation trend remains intact in spite of short-term volatility, said OCBC analysts who expected the yuan to trade in a tight range between 6.20-6.25 in the coming months and rise to 6.13 by the end of the year.
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