SHANGHAI: China’s yuan hovered at a more than 3-1/2-year high against the dollar on Thursday on continued year-end seasonal corporate demand, though some investors were growing cautious over how much more more Bejing would allow the currency to appreciate.

The yuan has gained nearly 3% against the greenback so far this year and China’s robust export growth is starting to slow, stirring talk over where authorities may draw a “red line” on its advance.

Both the onshore and offshore yuan advanced to cross this year’s peak and the psychologically critical 6.35 per dollar on Wednesday to hit the firmest level since May 2018, with analysts and economists attributing the strength to robust exports, a record trade surplus and ample dollar liquidity onshore.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint at 6.3498 yuan per dollar, 179 pips, or 0.28%, stronger than the previous fix of 6.3677. It was the firmest since May 15, 2018.