The yuan resumed its gradual appreciation and closed up against the dollar on Wednesday as the US currency traded at its weakest level against other major currencies in almost three years and the People's Bank of China fixed the yuan's mid-point versus the dollar at another record high.
A weaker dollar, driven by market anticipation of an imminent Federal Reserve decision to reinforce an ultra-easy policy stance, may have been behind the yuan's record fixing on Wednesday, traders said. Though the PBOC has set a string of recent highs for the yuan against the dollar in its daily fixings, on a nominal trade-weighted basis, the yuan hit a six-month low on Monday, according to J.P. Morgan data available via Thomson Reuters Datastream.
Spot yuan closed at 6.5112 versus the dollar on Wednesday, stronger than Tuesday's close of 6.5287. The currency has now risen 4.84 percent since it was depegged from the dollar in June 2010, and 1.21 percent since the start of this year. Offshore, one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3320, down from 6.3400 at the previous close. Their implied yuan appreciation in a year's time rose to 2.83 percent from 2.79 percent, echoing yuan appreciation in the onshore spot yuan, traders said.