The yuan edged higher on Friday after the central bank set its second-highest midpoint ever in response to a weaker dollar, but dealers doubted that the gains pointed to a renewed appreciation trend. Spot yuan closed 43 pips stronger at 6.3030 on Friday after the central bank fixed its midpoint at 6.2879, 105 pips stronger than Thursday's fix and just 39 pips shy of its all-time high of 6.2840 set on March 27.
Despite the jump of more than 100 points, the midpoint rose only 0.17 percent, far less than the 0.64 percent fall in the overnight dollar index, which was spurred by a stronger euro. "I really don't think this reflects significant yuan appreciation expectations," said a dealer at an Asian bank in Shanghai.
The market has recently dismissed fluctuations in the midpoint. Dealers expect it to stay in the 6.29-6.33 range in the near term, and recent volatility in the midpoint has done little to shake this view. The yuan actually weakened on March 27, the day of the highest-ever midpoint. A similar midpoint rise on March 19 also provoked shrugs from the market.
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