China's yuan edged higher against the US currency on Friday, helped by a drop in the dollar index and shrugging off a weaker mid-point fixing. The yuan in the spot market closed at 6.5833 per dollar, down slightly from Thursday's 6.5854. Before trade began, China's central bank set the daily mid-point at 6.5886, a touch weaker than Thursday's record high off 6.5883. The yuan has risen 3.69 since its mid-June depegging.
"The mid-point fell back. We have little interest in going long on the yuan," said a dealer at a European bank in Shanghai, adding that he was awaiting the outcome of Chinese President Hu Jintao's visit to the United States. Benchmark offshore one-year forwards now implied yuan appreciation of 2.1 percent in a year's time, down from around 2.9 percent at the beginning of the year, despite signs of robust economic growth. China's Q4 GDP surprised on the upside on Thursday.
The Chinese central bank had let the yuan rise more than 450 pips or 0.68 percent last week, before President Hu's US trip. One-year dollar/yuan NDFs were bid at 6.4550, down slightly from Thursday's close of 6.4720. Their implied yuan appreciation in a year's time rose slightly to 2.07 percent from Thursday's 1.80 percent.
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