China's yuan inches higher as companies convert cash holdings

China’s yuan edged up against the US dollar on Friday as businesses exchanged more foreign-currency funds, offsetting pressure from a firm dollar. Business Recorder reported that the onshore rate was 0.05% higher at 6.6711 per dollar, while the offshore yuan traded at 6.6719.

Companies are converting foreign-exchange earnings as the year-end approaches, with exporters typically increasing such sales ahead of the Lunar New Year to meet accounting needs and cover bonuses and holiday costs. The People’s Bank of China set its daily midpoint at 6.7152 per dollar, 396 pips weaker than a Reuters estimate; the yuan’s trading range is capped at 2% on either side of that reference rate. The dollar had strengthened amid investor expectations of a possible Federal Reserve rate increase in December, while traders were also monitoring the yen near 160 per dollar.