On Monday, the People’s Bank of China set the yuan midpoint at 6.7283 per dollar, the highest level since October 14, 2016. The official guidance 0.13% firmer than the bank’s previous fix.
The yuan’s strengthening reflects broad weakening in the greenback. The dollar was weighed down by US political uncertainty and doubts about whether there will be another Fed’s rate hike this year.
Earlier in the week, the yuan traded at 6.7350 per dollar in the spot market, then rose to the level of 6.7251 before hitting 6.7270, 0.02% firmer than the midpoint.
According to traders, the corporate dollar demand limited the Chinese currency’s strengthening. Meanwhile, the market largely ignored insignificant slowdown in the country's manufacturing sector.
Most analysts say that the Chinese economy is set to slow in the coming months on the back of growing borrowing costs and regulators limiting riskier financing types. Since the second quarter, the yuan rose against the dollar thanks to intensified capital control measures from Beijing.
