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China's yuan firms ahead of holiday, takes trade data in stride
[SHANGHAI] The yuan edged up against the US dollar on Wednesday on position adjustments ahead of the holiday weekend and due to a weakening dollar, with traders playing down soft export data.
China's exports fell more than expected in May as global demand remained stubbornly weak, but imports beat forecasts, adding to hopes that the economy may be stabilising.
Central bank data showed on Tuesday that the country's foreign exchange reserves in May fell to US$3.19 trillion, their lowest since December 2011, likely due to the effects of a stronger US dollar and sporadic official intervention.
Traders said both export and foreign exchange data had little immediate impact on the FX market.
"There's a great divergence in the market's outlook on the yuan," said a trader at a European bank in Shanghai.
"Bouts of dollar selling precede bouts of dollar buying. Traders are adjusting positions and corporates are buying dollars."
The People's Bank of China set the midpoint rate at 6.5593 per US dollar prior to market open, 0.04 per cent firmer than the previous fix 6.5618.
Spot yuan opened at 6.5717 per US dollar and was changing hands at 6.5682 at midday, firming 0.04 per cent from the previous close.
If the yuan closes around the midday level, it will weaken 0.3 per cent for the week.
China's markets will be closed on Thursday and Friday for the Dragon Boat festival holiday.
The offshore yuan was trading 0.06 per cent softer than the onshore spot at 6.5721 per US dollar.