The yuan closed slightly higher versus the dollar on Friday after the midpoint rebounded from its biggest 11-session fall on record, in line with a drop in the dollar index on Thursday in global markets. The People's Bank of China (PBOC) has signalled that yuan trade will correlate to the dollar but has also shown more willingness to let its daily midpoint fixing fluctuate in a wider range, traders said.
The yuan's fixing is seen likely to fluctuate more when the US dollar index stages sharp volatility. Spot yuan closed at 6.3227 against the dollar, up slightly from Thursday's close of 6.3300. Before trading began on Friday, the PBOC set the yuan's midpoint at 6.3200, up 0.25 percent from Thursday's 6.3359, in one of its rare hikes since China established the domestic foreign exchange market in 1994. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) implied the yuan would be almost unchanged in a year's time.