China's yuan fell against the U.S. dollar late Thursday as sentiment for yuan appreciation was damped by the People's Bank of China quarterly comments that it would keep exchange rate stable.
On the over-the-counter market, the dollar was at CNY6.3016 around 0830 GMT, up from Wednesday's close of CNY6.3000. It traded in a range of CNY6.2992 to CNY6.3050.
The central bank also guided the yuan much lower when it set its daily dollar-yuan central parity rate at 6.2991, compared with Wednesday's 6.2958. The robust setting for the dollar was in line with the greenback's overnight gains overseas. The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 79.655 late Wednesday in New York from 79.580 late Tuesday. At 0845 GMT, the dollar index was at 80.056.
"The central parity rose more today than it did in the past few days, making dealers wonder whether the fixing [for the dollar] will rise quickly in the coming days," said a Guangdong-based foreign bank trader.
He noted that market's expectations for further yuan rise was affected by the central bank's comments Wednesday that it would keep the yuan "basically stable at a reasonable level" and "increase two-way flexibility" in the exchange rate.
The yuan has risen 8.3% against the U.S. unit since June 2010, when China effectively ended its currency's two-year-long peg to the dollar and vowed to make the yuan more flexible. But it the currency has lost 0.1% so far this year.
Offshore, one-year dollar-yuan nondeliverable forward contracts rose to 6.2840/6.2940 from 6.2785/6.2815 late Wednesday, implying a 0.3% rise by the yuan against the dollar over the next year.
In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar was at CNY6.3015 late Thursday, up from CNY6.2990 late Wednesday.
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