Transaction volumes have dwindled with corporates only trading on a needs basis. Analysts say the central bank strategy is to force the market to whittle down an overhang of dollars by itself, and only intervening to sell yuan when the market's illiquidity becomes very pronounced. There were no signs of such intervention on Tuesday, traders said.
Spot yuan closed at 6.2256 per dollar, firming from Monday's close of 6.2279. The PBOC allowed the yuan's slight gain by setting its daily midpoint at 6.2885 to the dollar on Tuesday, compared with Monday's fix of 6.2908. The central bank lets the exchange rate diverge by no more than 1 percent from the midpoint it sets each morning. Volume dropped further to $2.590 billion on Tuesday from an already-thin $4.002 billion on Monday. That compares with an average full-day average volume of $13.9 billion in the first nine months of this year.