The yuan closed slightly higher versus the dollar on Friday, guided by the Chinese central bank's marginally stronger mid-point, and traders expected the currency to move narrowly in the near term. China appears to have quietly adjusted its currency policy in response to the deepening euro zone debt crisis, slowing the yuan's steady appreciation while trying to nip speculation of yuan depreciation.
Traders now see the yuan appreciating to around 6.30 versus the dollar by the year-end, implying it is set to rise 4.6 percent in 2011. But that lags a 5 to 6 percent appreciation that dealers had expected for the most part of this year. Spot yuan closed at 6.3424 versus the dollar, up slightly from 6.3459 at Thursday's close. Before trading began, the PBOC set the mid-point at 6.3317, marginally higher than Thursday's 6.3329. Spot yuan has now risen 3.9 percent so far this year. The bulk of the gain, 3.3 percent, was chalked up in the first eight months when China used China to help fight inflation. The PBOC fixed the mid-point so high on some days that even at limit down, the yuan closed firmer than previously.
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