* PBOC fixes mid-point at record high * Dollar at 14-month low pushes yuan higher * Spot yuan still moves below fixing on month-end dollar demand * Yuan at 6.3586, up 3.63 percent so far this year By Chen Yixin and Jacqueline Wong SHANGHAI, Oct 28 (Reuters) - The yuan ended up against the dollar on Friday, with the central bank setting a record high mid-point after the dollar index slumped following a European debt deal which sparked a massive relief rally in risk assets. The dollar index rebounded slightly after dropping around 1.8 percent overnight, the biggest one-day fall since May 2009. Euro zone leaders struck a last-minute deal to rescue Greece in which private banks and insurers would accept 50 percent losses on their Greek debt holdings. "The key reason is a really weak dollar," said a dealer at a local commercial bank in Shanghai, referring to the record high mid-point. "In the short term, the yuan is still under pressure from the United Status." Spot yuan , however, failed to hit a historical high and traded weaker than the mid-point as dealers reported huge dollar demand from large companies during the month-end and investors turning bearish over the weak domestic market. "Around the month-end, dollar demand is really strong," the local bank dealer said. Some dealers said another reason boosting dollar demand was arbitrage trade. The spread between the offshore market and onshore market had opened up opportunities for traders to buy dollars in the domestic market and sell them in Hong Kong. The spread is around 300 pips,or 0.5 percent, between offshore yuan , at 6.3850 and spot yuan , at 6.3586. The yuan closed at 6.3595 on Thursday. The yuan has risen 3.63 percent so far this year and 7.35 percent since it was depegged from the dollar in June 2010. Before trading began, the central bank set the mid-point at a record high of 6.3290, up from 6.3477 on Thursday. One-month USD/CNY NDF hit a record low of 6.3380 and one-year NDF broke through a 55-day moving average after the PBOC fixed the yuan's mid-point at a record high. The spread between the NDFs widened slightly to 0.011 from the previous session's 0.003, indicating possible appreciation in spot yuan. But the spread is still narrower than levels between Oct. 20 and Oct. 26 amid caution over Beijing's intention to appreciate CNY in the long run. One-month NDF was down 0.1 percent at 6.3410. One-year NDF dipped around 0.1 percent to 6.3480 after falling to 6.3880, below the 55-day moving average of 6.3418. One-year dollar/yuan NDFs implied yuan depreciation of 0.30 percent in 12 months from the mid-point on Friday, compared with depreciation of 0.33 percent on Thursday.

Source