Yuan Closes Up While Dollar Drops

The yuan closed up yesterday after the People's Bank of China (PBOC) set its daily midpoint slightly higher to reflect a fall in the dollar in global markets, and as oil companies bought dollars for their overseas business, traders said.

Still, the market is increasingly wary of the growing risk of Asian countries devaluing their currencies to protect exports, but ignored a decline in China's foreign direct investment (FDI) inflows, traders said.

Spot yuan closed at 6.2376 per dollar, up 0.11 per cent from 6.2443 at Tuesday's close. Volume was heavy at $21.04 billion, up sharply from Tuesday's $14.38 billion, partly pushed up by demand from oil firms, traders said.

Chinese oil giants, such as PetroChina and Sinopec, are the biggest dollar buyers on the Chinese domestic foreign exchange market for their active overseas acquisitions and because China imports more than half of its crude oil requirements.