SHANGHAI: The yuan closed at a record high against the dollar on Thursday as the People’s Bank of China (PBOC) set its yuan midpoint stronger than expected, signaling tolerance for appreciation, traders said.

There was little sign of central bank intervention via state-owned banks to boost the yuan, but the PBOC’s tolerance of a stronger yuan did encourage companies to keep selling dollars as they have done throughout this week, traders said.

Spot yuan closed at 6.2770 versus the dollar, up from Wednesday’s close of 6.2833. It hit an even higher intraday high of 6.2761 in late trade, the strongest since China set up the domestic foreign exchange market in 1994.

Firms sold dollars which had flooded into China’s onshore market after it resumed trading on Monday following a week-long holiday.

“Company were eager to trade dollars for yuan,” said a dealer at a major Chinese commercial bank in Shanghai.

“The PBOC’s non-action encouraged corporates to settle the yuan at high levels.”

The central bank set the yuan’s midpoint at 6.3391 versus the dollar, slightly stronger than Wednesday’s 6.3449.

Typically, the PBOC will set a weaker midpoint in response to a rise in the dollar index.

“The PBOC’s yuan midpoint today is unexpectedly strong given the recent strength…

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Yuan closes at record high as central bank tolerates rise

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