SHANGHAI: China's yuan firmed against the dollar on Thursday, as the greenback broadly fell in global markets and the US Treasury reaffirmed it would press China on its yuan currency policy.
The US Treasury will press China in bilateral meetings next week to keep moving toward a market-determined exchange rate, reduce excess industrial capacity, and make reforms that boost domestic consumption, a senior Treasury official said on Wednesday.
Traders expect that the annual US-China Strategic and Economic Dialogue meetings will shed further light on the country's foreign exchange policies as the yuan faces downward pressure from a strong dollar.
The People's Bank of China set the midpoint rate at 6.5688 per dollar prior to market open, 0.31 percent firmer than the previous fix of 6.5889, ending a three-day weakening trend. Wednesday's fixing was the lowest in more than five years.
Thursday's stronger fixing was mostly helped by the dollar's global slide after Japan delayed a sales tax hike, as widely expected. The dollar skidded 0.5 percent against a basket of major currencies on Wednesday and continued to decline on Thursday, standing at 95.200 around midday trade in Asia.
Spot yuan opened at 6.5796 per dollar and was changing hands at 6.5779 at midday, firming 0.04 percent from the previous close.
"The market was quite hectic in the morning with traders squaring their positions as the dollar slid," said a trader at a European bank in Shanghai.
"Right now we are all guessing if the dollar has lost its upward momentum."
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