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The onshore yuan barely moved against the dollar on Thursday as the firmer offshore market offset a slightly weaker midpoint set by China’s central bank.
Traders credited the stronger offshore yuan to the rising prospects of the International Monetary Fund, including the Chinese currency to its Special Drawing Rights (SDR) basket in the fund’s upcoming decision in November.
The People’s Bank of China set the midpoint rate at 6.3596 per dollar prior to market open, 0.09 per cent weaker than the previous fix at 6.3536.
The spot market opened at 6.3574 per dollar and was changing hands at 6.3587 at midday, only 0.01 per cent firmer than the previous close.
“The offshore yuan inched up, buoyed by the expectation that the yuan is very likely to be included into the SDR basket,’’ said a trader at a foreign bank in Shanghai.
“So the onshore yuan took cues from the offshore market and stayed flat. The spread between the two markets thus converged a little bit.’’
The offshore yuan was trading 0.37 per cent or 233 pips, weaker than the onshore spot at 6.382 per dollar. It was trading around 400 pips weaker than the onshore spot in the past two days.
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