Vs Parity Pvs
USD/CNY Central Parity 6.3509 6.3436
USD/CNY OTC 0830 GMT 6.3456 -0.08% 6.3465
High 6.3550 +0.06%
Low 6.3415 -0.15%

China's yuan was steady against the U.S. dollar late Wednesday as arbitrage-driven selling pressure on the Chinese currency faded, offsetting the central bank's weaker reference rate for the yuan.

On the over-the-counter market, the dollar was at CNY6.3456 around 0830 GMT, down slightly from CNY6.3465 late Tuesday. It traded in a range of CNY6.3415 to CNY6.3550.

The yuan has risen 3.9% against the dollar this year and 7.6% since June 2010, when China ended its currency's peg to the dollar.

The People's Bank of China Wednesday fixed the dollar/yuan central parity rate at 6.3509, up from 6.3436 Tuesday, on the back of a stronger dollar overseas.

But as the discount between the yuan in Hong Kong and the yuan in Shanghai has narrowed, arbitrage selling has eased, traders said.

"Now that there's no longer a significant premium for the dollar against the offshore yuan versus onshore, there's little supporting the dollar onshore," a local bank trader based in Beijing said.
The gap between the two rates widened to historic levels of more than 400 pips in October. On one day last month the yuan in Hong Kong traded at a discount of close to 3%. The differential narrowed to within about 50 pips this week.

Late Wednesday in Hong Kong, where the Chinese currency floats freely, the dollar traded at CNY6.3595, up from 6.3525 late Tuesday, tracking the higher dollar/yuan fixing onshore.

On the offshore nondeliverable forward market, the yuan rose against the dollar. One-year dollar-yuan nondeliverable forward contracts fell to 6.3300/6.3370 from 6.3420/6.3460 late Tuesday, implying a 0.2% rise by the yuan against the U.S. currency over the next year.

Source:chinesestock