The yuan rose slightly versus the dollar on Thursday as traders believe the currency might soon see a floor after the central bank let the midpoint score its biggest 11-session loss since China set up the domestic foreign exchange market in 1994. The People's Bank of China (PBOC) appears to be testing market reaction for a weakening of the yuan since the start of this month while officials state that the government needs to widen the range for yuan trading.
Spot yuan closed at 6.3300 against the dollar, almost flat from Wednesday's close of 6.3323. Before trading began, the PBOC set the yuan's midpoint at 6.3359, weaker than Wednesday's 6.3328. The PBOC's fixing has lost 0.7 percent over the past 11 trading sessions. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) implied the yuan would be almost unchanged in a year's time. One-year NDFs implied yuan deprecation in the previous two sessions, reversing its recent trend of implying yuan appreciation.
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