Yuan climbs past key 6.6 after strong fixing

China’s yuan jumped to its strongest against the US dollar in more than two weeks on Thursday, breaching a key threshold on the back of heavy dollar selling after the central bank lifted its official fixing by the most in over three weeks.

The yuan also gained momentum as the dollar slipped in global markets ahead of a US tax bill that will be unveiled after a one- day delay.

Prior to market opening on Thursday, the People’s Bank of China set the midpoint rate at 6.6196 per dollar, 104 pips or 0.16 percent firmer than the previous fix of 6.63 on Wednesday.

The spot market opened at 6.5940 per dollar and rose to a high of 6.5827 at one point in early trading, its best level in more than two weeks.

The spot yuan breached the psychologically important 6.6 per dollar for the first time since October 17.

During the afternoon trading, the onshore yuan gave back some gains and changed hands at 6.5970 per dollar, 0.07 percent firmer than the previous late session close. The offshore yuan was traded around 6.6 per dollar.

Traders said gains in the Chinese currency were driven by corporate dollar selling, which forced some market participants to follow and sell their dollar positions to reduce losses.

“The trigger was the corporate flow,” said a Shanghai- based trader at a foreign bank in Shanghai, adding the market had not expected such strong corporate dollar sales.

The global dollar index fell to 94.547 from the previous close of 94.815.