China high yuan midpoint level

Shanghai: Reuters China\'s central bank set a record high midpoint for the dollar-yuan exchange rate yesterday for the second consecutive day, with spot prices moving closer to testing the recently widened trading band. Spot prices remained in the same range they traded in all week, in spite of the higher daily fixing. Spot yuan opened at 6.3055 per dollar, only 5 points stronger than Thursday\'s close, despite a midpoint of 6.2787, up 0.07 per cent from the prior fix. Traders priced the yuan at 6.3087 at one point, 0.41 per cent away from the midpoint, the second-widest move the currency has travelled away from its daily fixing since the trading band was widened to 1.0 per cent from 0.5 per cent from April 16. On that day, the yuan moved 0.46 per cent away from the fixing. It has yet to break through the old range limit of 0.5 per cent. The yuan\'s midpoint typically rises in response to overnight weakening in the dollar index, and the index was down 0.118 per cent on Thursday night. However two traders at Chinese banks said the central bank\'s move was a political gesture prior to the opening of the annual US-China Strategic and Economic Dialogue this week. A trader at a major European bank in Shanghai said that regulators were also pushing the midpoint up to reinforce confidence in the currency\'s upward trend. \"The PBOC has set the yuan\'s fixing at much higher levels than the currency\'s trading rates recently to curb expectations that the yuan might depreciate this year, given concerns over China\'s economic slowdown.\"