China's yuan closed up against the dollar in the wake of a stronger mid-point on Thursday, and was underpinned by expectations of further gains, especially after Nigeria said the yuan would be a part of it foreign exchange reserves. Spot yuan closed at 6.3840 versus the dollar, up 100 pips from 6.3940 at Wednesday's close. It has now risen 3.22 percent so far this year and 6.92 percent since its depegging in June 2010.
Before trading began, the PBOC fixed the day's mid-point at 6.3889, stronger than Wednesday's 6.3968 after the US dollar index dropped 0.6 percent overnight. The index was almost unchanged in early European trade on Thursday. Dealers said the yuan could move between 6.37 and 6.39 per dollar in the near term, but dollar gains could cancel out strength in the yuan as uncertainties from the eurozone debt crisis push investors to safe haven currencies.
Offshore, one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.2925 late on Thursday, little changed from the 6.2920 at the closed on Wednesday. Their implied yuan rise in a year's time was at 1.53 percent compared with Wednesday's 1.54 percent.