China's yuan firmed against the dollar on Friday, after the central bank set a stronger midpoint and the US Federal Reserve decided not to raise interest rates overnight, putting the dollar on the defensive. The Chinese currency is set to remain little changed this week if it closes at the midday level. "A slew of strong midpoints has helped keep the yuan stable of late," said a dealer at a European bank in Shanghai. "The Fed's overnight decision, while widely expected, has boosted expectations of a relatively weak dollar in the near term."
The People's Bank of China set the midpoint rate at 6.3607 per dollar prior to market open, 0.1 percent firmer than the previous fix 6.367. The spot market opened at 6.3635 per dollar and was changing hands at 6.3639 at midday, 0.03 percent stronger than the previous close. The offshore yuan was trading 0.55 percent weaker than the onshore spot at 6.399 per dollar. Offshore one-year non-deliverable forwards contracts, considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.579, or 3.32 percent weaker than Friday's midpoint.