SHANGHAI: The yuan eased slightly on Wednesday against a dollar that was stronger against most major currencies, but the Chinese central bank effectively set a floor under the yuan, using the daily fixing to demonstrate its desire for stability.
Spot yuan was trading at 6.3485 per dollar at midday, slightly weaker than Tuesday's close of 6.3473. It touched an intraday low of 6.3516 and a high of 6.3406.
Traders noted that dollar demand rose whenever the yuan weakened below 6.35 per dollar.
Before trading began, the People's Bank of China (PBOC) fixed its daily yuan midpoint at 6.3460 against the dollar, slightly weaker than Tuesday's 6.3402.
Over the past six weeks, the PBOC has kept the midpoint between 6.33 and 6.35, in line with a largely stable dollar index, which measures the dollar's value against a basket of currencies dominated by the euro.
Shepherded by the PBOC, the yuan has flirted with the mid-point for each day this week, following a long period during which spot prices consistently traded far weaker than the midpoint. Otherwise the yuan's moves were largely influenced by global dollar trends, though investors were eyeing economic data including trade and inflation due to be released next week.
"The market is also watching China's main economic data in August to be released starting next week, although initial signs are that the economy continues to perform poorly," said a dealer at an Australian bank in Shanghai.
Investors were put on guard by surveys of manufacturers' purchasing managers for August which showed China's vast manufacturing sector has been badly hit by slowing orders, a sign that the pace of growth will weaken well into the third quarter.
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