China's yuan edged down slightly on Thursday, guided by a weaker central bank midpoint, but the currency remained solidly in the range in which it has fluctuated since late March. Spot yuan ended at 6.3039 per dollar, 11 points weaker than Wednesday's close, after the central bank set a midpoint of 6.3004, 56 pips weaker than Wednesday's fix.
The People's Bank of China (PBOC) followed its usual pattern of setting a weaker fix in response to a rise in the dollar index overnight. The yuan touched 6.3471, its weakest point of the year, on March 14, after a series of progressively weaker midpoints in early March. The central bank then reversed course, guiding the currency higher over the next week with stronger fixings.
The currency has been range-bound ever since, staying mostly between 6.29 and 6.32 per dollar. Traders say this range represents a rough consensus on the fair value of the currency. "Based on the behaviour of the market, we all think (the yuan) is in a reasonable range," said a trader at a joint-stock bank in Shanghai. The PBOC last Saturday announced a widening of the yuan's trading band from 0.5 percent on either side of the midpoint to 1 percent.
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