The yuan closed up against the dollar on Monday, hitting another intraday record high, after the People's Bank of China raised bank required reserves to mop up liquidity in its financial system and contain high inflation. The central bank on Monday fixed its yuan mid-point nine pips weaker compared with Friday, letting the currency's steady climb take a breather.
But traders said that was likely to be temporary and would not affect the longer-term trend, that China will use the yuan as part of its weaponry to fight inflation. Spot yuan closed at 6.5287 against the dollar on Monday, up from Friday's close of 6.5325. It hit a record high of 6.5276 in intraday trading, having appreciated 4.57 percent since it was depegged in June 2010, and 0.95 percent so far this year. Offshore, one-year non-deliverable forwards were bid at 6.3800 in late trade, little changed from 6.3790 at Friday's close. Their implied yuan appreciation in a year's time edged down to 2.36 percent compared with 2.38 percent.
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