SHANGHAI: The yuan set a record high against the dollar on Wednesday, for the second time in five days, as Beijing continued to show tolerance for measured appreciation.
The spot rate opened at a record 6.1950 per dollar Wednesday morning, after the People's Bank of China (PBOC) set the official midpoint at 6.2548, its highest level since the landmark revaluation in 2005. The exchange rate is allowed to rise or fall by 1 percent away from the midpoint fixing.
The yuan continued to strengthen during the morning session after fresh trade data showed China recorded a mild trade deficit in March, with imports beating market expectations while export growth remained in line with forecasts.
At midday, the spot rate was 6.1936.
The Chinese currency has been repeatedly setting records against the dollar since late 2012. Traders attribute this to a combination of domestic bullish sentiment and monetary easing overseas, combined with hot money inflows from overseas seeking yuan assets.
While data suggests the PBOC has increased its intervention in the market to hold back the yuan from appreciating too rapidly, given the recent slide in the Japanese yen, there is no sign yet that China is preparing to wage "currency war" by forcing the yuan to depreciate.
Domestic financial markets have shown no particular reaction to a decision by Fitch Ratings to downgrade Chinese local currency debt on Tuesday.
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