Yuan closes at new high in thin trade
The yuan can rise or fall only 1% from the central bank's base rate in a day.Corporates continued selling off long dollar positions, which they had accumulated partly because the PBOC had recently fixed midpoints that prevented companies from liquidating at the rates they wished, traders said.
They said the current stand-off will likely continue until the PBOC either releases more yuan liquidity into the market via dollar purchases or else sets its midpoint stronger to allow the spot rate more room to appreciate without hitting the 1% band.
"We don't know what's the PBOC's current strategy," said a senior dealer at a major European bank in Shanghai. "But the central bank should at least boost liquidity to let the market operate normally."
Nearly every trade in the spot market occurred at 6.2223 per dollar, a shade stronger than Monday's close of 6.2255 and the strongest level permitted by the central bank's daily trading band.Central bank data showed that trading was relatively active in the early afternoon when the yuan was briefly quoted off the upside limit. But traders said overall trading was very thin.Tuesday's all-time high
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