China's yuan strengthened against the U.S. dollar Thursday, after the euro rose against the dollar overnight as strong results in a European debt auction renewed risk appetite.
On the over-the-counter market, the dollar was at CNY6.7861 around 0730 GMT, down from Wednesday's close of CNY6.7943. It traded between CNY6.7830 and CNY6.7885.
The dollar-yuan central parity was set at 6.7817, down from 6.7907 Wednesday, after the euro rose as high as $1.2764 intraday in New York trading Wednesday, compared with $1.2689 late Tuesday in New York.
The dollar fell against the euro Wednesday night in global trading after a successful Portuguese government debt auction overshadowed concerns about the credibility of European bank stress tests, prompting investors to switch to higher-yielding currencies.
Although onshore yuan traders had expected a lower dollar-yuan central parity rate because of the dollar's weakness, it was fixed well below the market's expectations for around 6.7850. But traders said activity was light except for some dollar-buying from state-owned banks in the morning.
Some traders stayed on the sidelines as they awaited key economic data, including China's August import and export data, to be issued Friday.
'Longer term, if China continues to see rising exports and a widening trade surplus, the yuan's appreciation trend will continue,' said a Guangzhou-based trader at a foreign bank.
Fixing levels in recent sessions have moved largely in line with the dollar index's overnight moves, the trader said, adding that people will focus on the dollar's moves in the global market for trading cues.
Traders said earlier that the visit by U.S. National Economic Council Director Lawrence Summers to China this week may have prompted the central bank to set lower dollar-yuan central parity rates. People's Bank of China Gov. Zhou Xiaochuan said Thursday he discussed the yuan exchange rate issue with Summers.
In the offshore market, one-year dollar-yuan nondeliverable forwards fell to 6.6994/6.7044 from 6.7088/6.7108 late Wednesday.