- The economy was forecast to grow 8.1%, driven by strong domestic demand and exports, before moderating to 5.5% in 2022.
SHANGHAI: China's yuan softened slightly on Wednesday, in spite of firmer central bank guidance, as market participants awaited the outcome of the US Federal Reserve's policy meeting.
The People's Bank of China set the midpoint rate at 6.4853 per dollar prior to market open, 71 pips firmer than the previous fix of 6.4924 and the strongest such guidance since March 12.
The spot market opened at 6.4880 per dollar and was changing hands at 6.4868 at midday, 38 pips weaker than the previous late session close.
The offshore yuan was trading at 6.4827 per dollar.
The dollar, which gained against its peers for a third day, is set to take its cues from the Federal Reserve's policy statement and a speech by President Joe Biden on Wednesday. It seeks to extend a recovery from an eight-week low touched earlier in the week against a basket of currencies.
Traders said the yuan remained rangebound as the dollar index traded mainly below the 91 level ahead of the Fed meeting, and the possibility could not be ruled out that the dollar index continues to slide after the meeting.
"The recent yuan rebound was mainly due to the weakness in the dollar index," said a trader at a foreign bank. "I believe the dollar index would remain weak, giving the yuan appreciation room."
Investors will be scrutinising the Fed's comments at the close of its policy meeting later on Wednesday, for insight into its thinking on inflation, bond purchases and risks to the financial system posed by soaring asset prices.
CIB Research said in a report the yuan would maintain strength given the global resurgence of the coronavirus.
The resilience of the Chinese economy will also bolster the yuan. China's economic rebound from a pandemic-induced slump is forecast to be the strongest this year, the Asian Development Bank said on Wednesday.
The economy was forecast to grow 8.1%, driven by strong domestic demand and exports, before moderating to 5.5% in 2022.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 96.72, firmer than 96.68 previously.
The global dollar index rose to 90.995 from the previous close of 90.897.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.6533, 2.53% away from the midpoint.