Vs Parity Previous USD/CNY Central Parity 6.3045 6.3017 USD/CNY OTC 0830 GMT 6.2415 -1.00% 6.2405 High 6.2439 -0.96% Low 6.2415 -1.00% SHANGHAI--China's yuan fell against the U.S. dollar late Friday after the central bank guided the Chinese currency weaker against the greenback via its daily reference rate, although the yuan still hit its daily upper limit for the fourth consecutive day. On the over-the-counter market, the dollar was at CNY6.2415 around 0830 GMT, higher than Thursday's close of CNY6.2405. It traded in a range of CNY6.2415 to CNY6.2439. The People's Bank of China set the dollar/yuan central parity rate at 6.3045, compared with Thursday's 6.3017. The bank allows the dollar/yuan to move within 1% either side of parity; it hit that 1% limit when the dollar touched CNY6.2415. Traders said the pair's intraday movement was in line with that of the fixing as China's central bank seems to have been trying in the past few sessions to temper the yuan's recent sharp gains. A rising yuan is bad for exporters as it will make their products less attractive to foreign customers. "If the central parity is kept at such high levels, the market level will gradually move towards it," said a Shanghai-based foreign bank trader. The PBOC may want to cool things down after the yuan's recent volatility and the central parity may be kept within its recent range in the near term ahead of the country's once-in-a-decade leadership change next week, traders said. "I think the PBOC may keep the fixing at around 6.3000 in the coming sessions," said a local bank trader in Shanghai. Some corporate demand for the greenback kicked in in the afternoon session, helping to support the pair, said the local bank trader in Shanghai. That was also reflected in dollar/yuan foreign exchange swaps, which were quoted at a premium of 1550 pips from the spot, compared with Thursday's 1505 pip premium. "(Yuan) liquidity conditions seem fairly strong after the central bank's aggressive cash injection earlier this week. When companies need to buy dollars, naturally the premium would rise," the local bank trader said. The yuan has risen 0.8% against the dollar since the start of 2012. Offshore, one-year dollar/yuan nondeliverable forward contracts rose to 6.3541/6.3591 from 6.3497/6.3552 late Thursday, implying a 1.8% 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 CNY6.2440, slightly higher than CNY6.2420 late Thursday. Write to Wynne Wang at wynne.wang@dowjones.com and Yue Li at yue.li@dowjones.com

Source