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SHANGHAI: China’s yuan firmed against the US dollar in light trading on Monday after the central bank set its official midpoint at the strongest level in over three months.
Prior to market opening, the People’s Bank of China set its official yuan midpoint at 6.5683 per dollar, reflecting solid spot yuan performance on Friday. Monday’s official midpoint, 138 pips or 0.21 per cent firmer than Friday’s fix of 6.5821per dollar, was the strongest since Sept 20.
In the spot market, the onshore yuan opened at 6.5745 per dollar and rose to 6.5565 at one point. As of midday, the onshore spot yuan gave back some of its gains, changing hands at 6.5622, 143 pips firmer than the previous late session close and 0.09 per cent stronger than the midpoint.
Traders said recent strength in the Chinese currency was largely supported by a weaker dollar, but when the spot yuan strengthened to approach 6.55 , buying interest in the greenback emerged.
A foreign exchange analyst at a Chinese bank said the market believes that the yuan at 6.55 would be an overshoot for the Chinese currency.