Moderate selling of U.S. dollars by banks near the session’s end provided support for China’s yuan, which ended unchanged against the U.S. unit Friday despite a higher dollar-yuan central parity.

On the over-the-counter market, the dollar ended at CNY6.8310 around 0930 GMT, unchanged from Thursday’s close. It traded between CNY6.8310 and CNY6.8320.

“Customer flow is thin today because it’s summer, when many traders are on
vacation, and it certainly doesn’t help that Beijing hasn’t shown any signs of
adjusting its stable yuan policy,” said a Shanghai-based trader with a foreign
bank.

Market participants shrugged off the International Monetary Fund’s comment that the yuan is “substantially undervalued,” because Beijing isn’t likely to alter its stable yuan policy based on the IMF’s comment alone, the trader said.

“For all we know, the spot rate may trade around 6.8300-6.8350 for the rest
of the third quarter,” he said.

The central parity was set at 6.8318 Friday, up from 6.8307 Thursday, to
reflect the dollar’s overnight gains against the euro and the yen. Thursday
afternoon in New York, the euro was at $1.4203, down from $1.4211 late
Wednesday, and the dollar was at Y95.10, up from Y93.54.

Vice Premier Wang Qishan’s talks with officials in the U.S. next week haven’t
had an impact on the market, because traders expect the talks to focus on the
unwinding of stimulus policies rather than on the value of the yuan.

Another Shanghai-based trader with a foreign bank said the dollar may extend gains next week as Chinese importers buy dollars to settle accounts near the end of the month.

“But I don’t expect 6.8330 to be breached if the central parity continues to
be stable, as traders have little inclination to diverge too far from the
central parity,” she said.

Offshore, one-year dollar-yuan nondeliverable forwards were at 6.7430/6.7480 late Friday, down from 6.7628/6.7668 Thursday.