China's yuan rises in line with PBOC guidance, near-term stability

SHANGHAI: China's yuan rose against the dollar on Thursday as the central bank set a slightly stronger midpoint for the first time in four days, a move traders said that shows the government is keeping the currency stable.

Spot yuan stood at 6.1394 per dollar at midday, up 0.09 percent from Wednesday's close after the People's Bank of China (PBOC) fixed its official midpoint at 6.1320 before trading began, up 0.04 percent from Wednesday's 6.1343.

Traders reported a better balance of corporate dollar supply and demand after recent moves engineered by the central bank weakened the yuan, changing market views about its future value.

This implies that the yuan may remain largely stable in the near term, without more intervention from the central bank.

"Companies have recently become less eager to sell dollars they earn, with the recent yuan depreciation casting some doubts on the likelihood of non-stop yuan appreciation," said a trader at a Chinese commercial bank in Shanghai.

"This has led to a more balanced dollar supply and demand, because corporate dollar sales are a main force to absorb an oversupply of dollars in the market and consequently ease pressure for the yuan to appreciate," the trader said.

Traders expected the yuan to move in a range of 6.12 to 6.16 versus the greenback in the next couple of weeks or so, barring a change of mind on the PBOC's part.

The PBOC surprised global markets in February and early March by engineering a sharp decline in the yuan, which traders said was done to deter speculators from betting the currency would appreciate non-stop.