WSJ:China Yuan Down Late as Demand for Dollar Rises
China's yuan slipped against the U.S. dollar late Friday due to corporate demand for dollars, despite a slightly lower fixing for the dollar/yuan pair by the central bank.
On the over-the-counter market, the dollar was at CNY6.3430 around 0830 GMT, higher than Thursday's close of CNY6.3428. It traded in a range of CNY6.3383 to CNY6.3454.
The People's Bank of China set the dollar/yuan central parity rate at 6.3412, lower than Thursday's 6.3439, after the euro rose following the news that the European Central Bank would buy unlimited short-dated government bonds to help the region's debt-laden nations.
The onshore dollar was supported by demand from importers. Traders said such flows are usually heavy in September because importers need the dollar to settle their bills at the end of the quarter.
"Also, the dollar is very cheap already after its recent losses," said a Shanghai-based trader with a foreign bank.
The yuan has fallen 0.8% since the start of 2012, but it hit a three-month high Monday.
Offshore, one-year dollar/yuan nondeliverable forward contracts fell to 6.4230/6.4280 from 6.4388/6.4403 late Thursday, implying a 1.3% fall by the yuan over the next year.
In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar was at CNY6.3435, down from CNY6.3473 late Thursday.
