The yuan closed up versus the dollar on Friday after the People's Bank of China set a record high mid-point for the second day, in a further sign that the government is using the currency to help fight high inflation, worsened by surging imported commodity prices.
But the yuan failed to immediately hit a record trading high amid caution that its appreciation may still be limited in the next couple of weeks as Chinese leaders gather in Beijing this week for the annual parliamentary session typically held in the first half of March, traders said.
Spot yuan closed at 6.5686 versus the dollar, up from Thursday's close of 6.5731 and has risen 3.92 percent since its depegging in June 2010. It is now within arm's reach of its record trading high of 6.5654 hit on February 21. Before trading began, the PBOC fixed the yuan's mid-point at a record high of 6.5671 on the dollar, stronger than Thursday's 6.5695. Benchmark one-year dollar/yuan non-deliverable forwards (NDF) were bid at 6.4050.
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