* Yuan also hits record intraday high of 6.2761/dlr in late
* PBOC midpoint unexpectedly strong - traders
* No signs of direct PBOC intervention via state banks
* Yuan could rise 1 pct by end of this year - traders
By Lu Jianxin and Gabriel Wildau
SHANGHAI, Oct 11 The yuan closed at a record
high a gainst 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
"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
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 in the dollar index. That has boosted
sentiment towards the yuan," said a dealer at a major European
bank in Shanghai.
Even with the stronger midpoint, the intraday high came very
close to the maximum 1 percent daily divergence permitted by the
The PBOC has set midpoints much weaker than the yuan's
trading levels since mid-September, in a sign that the
authorities, worried by China's weakening exports, were trying
to prevent the currency from appreciating too sharply, traders
In September, the yuan posted its biggest monthly gain of
the year thanks in part to the U.S. Federal Reserve's launch of
a third round of quantitative easing (QE3) which sparked
interest in riskier assets.
But traders said they still expected the central bank's
tolerance of yuan appreciation would be limited.
Several traders said they believed the central bank would
allow the yuan to rise no more than 1 percent this year compared
to end-2011. That would put the yuan at 6.2322 by the end of the
Driven by the QE3, the yuan has now risen 0.22 percent
versus the dollar so far this year, reversing a fall of 1.6
percent by late July.