China's yuan holds steady as corporates cling to dollar

SHANGHAI: China's yuan was little changed on Thursday, with strong corporate demand for dollars counteracting the eight-and-a-half-month high midpoint set by the central bank, traders said.

By midday, spot yuan stood at 6.1392 per dollar, almost unchanged from Wednesday's close.

The People's Bank of China (PBOC) fixed the yuan's daily midpoint at 6.1320 per dollar, the highest level since March 17, up 0.06 percent from the previous day's fix.

Traders said corporates and individuals are keeping more dollars on hand as investors bet on further policy easing after the central bank cut benchmark interest rates last Friday.

Further easing could end the Chinese currency's rally of more than 2 percent against the dollar since May.

An index of the yuan's real effective exchange rate - the currency's value against a trade-weighted basket after adjustments based on inflation - showed an even more pronounced increase of 6.5 percent since May, according to the Bank for International Settements (BIS).

Latest BIS data shows the yuan index rose 1.5 per cent to 117.73 in October from 115.99 in Sepetember.

Use of the renminbi also continues to rise, accounting for 11.2 percent of total payments between China and the rest of the world, state news agency Xinhua reported on Wednesday, citing Belgium-based global payment services company SWIFT. That's up from 6.2 percent 18 months ago.