SHANGHAI: China's yuan rose slightly against the dollar on Wednesday amid further signs of economic momentum in the world's second-largest economy, while traders said dollar selling by companies continues to support the Chinese currency.
Growth in China's services sector hit a five-month high in August, underpinned by optimism over government policy measures, a private survey showed, the latest evidence that the world's second-largest economy may have averted a sharp slowdown.
The Markit/HSBC Services Purchasing Managers' Index (PMI) climbed to 52.8 in August, up from July's 51.3 and the highest since March, the survey showed on Wednesday.
However, in a sign that the People's Bank of China (PBOC) may not want to over stimulate the market, the central bank set a slightly weaker mid-point on Wednesday following a rally in the dollar index, traders said.
Spot yuan changed hands at 6.1205 per dollar at midday, inching up 0.01 percent from the previous close, even after the PBOC set its midpoint at 6.1729, or 0.02 percent weaker than Tuesday's 6.1718.
"Despite today's small gain, spot yuan's movements remain largely decided by the PBOC's midpoint," said a dealer at a Chinese commercial bank in Shanghai.
"Both recent signals sent by the central bank and depreciation of other Asian currencies will cap the yuan's rise in the near term, even though the currency was temporarily supported by corporate dollar sales this morning."
The yuan has gained 1.81 percent far this year, bucking the weakening trend of emerging market currencies. However, the bulk of the yuan's gains were in April and May.
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