Yuan slightly firmer versus US dollar

Wednesday, July 21, 2021

The yuan inched higher on Wednesday as the greenback paused after its recent rallies and as Chinese companies ramped up US dollar selling, Reuters reports.

Before the market opening, the People's Bank of China set the midpoint rate at 6.4835 per dollar, 20 pips firmer than the previous fix of 6.4855.

In the spot market, onshore yuan opened at 6.4800 per dollar and was changing hands at 6.4758 at midday, 86 pips firmer than the previous late session close.

Several market participants said gains in the yuan starting on Tuesday were supported by heavy dollar selling from corporates and major state-owned banks, prompting some to speculate if authorities were trying to slow the pace of recent yuan weakness and prevent it from breaking through the psychologically important 6.5 per dollar level.

China's major state-run banks often act as agents for the central bank in the country's FX market, but they also trade on their own behalf.

Meanwhile, the rebound in the yuan has pushed the its value against its rivals to a more than 5-year high. Yuan's basket index, as measured by the China Foreign Exchange Trade System (CFETS) index, climbed to 98.55 on Wednesday, up nearly 4 percent so far this year, according to Reuters' calculations based on official data.