The yuan closed slightly lower against the dollar on Thursday after the People's Bank of China fixed a slightly stronger mid-point, but fell short of letting its fixing hit a new high. The PBOC appeared cautious, to not be too aggressive in letting the yuan appreciate over the past week amid the global market turmoil sparked by Japan's earthquake and nuclear crisis, traders said.
But traders said China was unlikely to change its goal for the yuan to appreciate in the long run as it appears to be using the currency to fight high inflation and help adjust an economic structure heavily reliant on exports. "China has always cared about the stability of its currency during global market chaos, in particular amid the appreciation of other Asian currencies, which will add upward pressure on the yuan," said a senior trader at a European bank in Shanghai.
Spot yuan closed at 6.5744 versus the dollar, down from Wednesday's close of 6.5713. The currency has now risen 3.83 percent since it was depegged in June 2010. Before trading began, the PBOC fixed the yuan's mid-point at 6.5690 to the dollar, stronger than Wednesday's 6.5718 but short of the fixing's record high of 6.5661 set on March 7. Benchmark one-year dollar/yuan non-deliverable forwards (NDF) were bid at 6.4600 late on Thursday, little changed from 6.4610 at Wednesday's close. Their implied yuan appreciation in a year's time was at 1.68 percent compared with 1.67 percent.
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