The yuan closed a touch higher versus the dollar on Friday after the People's Bank of China set a slightly stronger mid-point in the wake of a fall in the US Dollar Index. The yuan remained more than 400 pips lower than its record trading high hit on October 11 right before the US Senate granted approval to a bill aimed at pressing China to let the yuan appreciate faster, saying an artificially weak yuan was robbing jobs in the United States.
Traders said the market did not take Friday's PBOC mid-point as a signal for a return of yuan appreciation because of wrangling between China and the United States over the value of the yuan on the political front. The PBOC has set a slew of weaker mid-points since October 12 in a clear expression of China's displeasure with the US Senate's approval of the bill. Spot yuan closed at 6.3840 versus the dollar, up slightly from Thursday's close of 6.3855. It has risen 3.22 percent so far this year and 6.93 percent since it was depegged from the dollar in June 2010.
Before trading began, the PBOC set the mid-point of the day at 6.3628, slightly stronger than Thursday's 6.3652. The central bank uses the fixing to signal the government's intentions for the yuan. Offshore, one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.4100 in late trade, up from 6.3990 at the close on Thursday.
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