The yuan closed up slightly against the dollar on Friday but gains were capped by caution after the People's Bank of China set a high mid-point but failed to let its daily fixing hit a record high. Traders had expected the fixing to hit a new peak as Beijing appeared to be using the yuan to help fight imported inflation propelled by high global commodity prices, with oil fluctuating sharply this week.
The benchmark Reuters Jefferies CRB index, which covers 19 mostly US-traded commodities, has leapt around nearly 40 percent since June last year, while China is the world's fastest growing market for staple goods. Spot yuan closed at 6.5750 to the dollar from Thursday's close of 6.5787 and having now risen 3.82 percent since its depegging from the dollar in June 2010.
Before trading began, the PBOC fixed the yuan's mid-point at 6.5757 versus the dollar, stronger than Thursday's 6.5795 but just shy of a record high of 6.5705 on Monday. Benchmark one-year dollar/yuan non-deliverable forwards were bid at 6.4260, down from 6.4300 at Thursday's close.