China’s yuan weakened Wednesday morning but was almost unchanged against the dollar at midday after state-owned banks bought the currency on behalf of the central bank to stabilise its rate, traders said.
“There are persistent small amounts of yuan purchases from state-owned banks on Wednesday,” said a trader at a Chinese commercial bank.
The People’s Bank of China set the midpoint rate at 6.3712 per dollar prior to market open, 0.07 percent weaker than the previous fix 6.3665.
The yuan hit an intraday low of 6.3744 in early trade in line with the slightly weakened midpoint, but it rebounded after the intervention.
Its intraday high of 6.3692 was not far away from the midday level. “I think the yuan will sustain at around 6.37 due to the central bank’s intervention, moving within 100 points in either side,” the trader said.
The offshore yuan was trading 0.57 percent weaker than the onshore spot at 6.406 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 6.5935, or 3.37 percent weaker than Wednesday’s midpoint.