SHANGHAI: China’s yuan was largely steady against the US dollar on Thursday after the country’s foreign exchange regulator said capital outflows had eased significantly in the first quarter.

Sources told Reuters on Wednesday that China’s central bank has relaxed some curbs on capital outflows, the first signs of easing of measures put in place late last year as authorities feel more confident that pressure on the yuan has eased.

As cross-border flows become more balanced, expectations for further yuan depreciation have weakened significantly, State Administration of Foreign Exchange (SAFE) spokeswoman Wang Chunying told a news conference.

The People’s Bank of China set the yuan’s midpoint rate

at 6.8792 per dollar prior to the market open, weaker than the previous fix of 6.8664.

In the spot market, the yuan opened at 6.8885 per dollar and was changing hands at 6.8875 at midday, just 5 pips firmer than the previous late session close and 0.12 percent weaker than the midpoint.

China’s commercial banks sold a net $40.9 billion in foreign exchange in the first quarter, around one-third of the net sales in the first quarter of 2016, SAFE data on Thursday showed.

“Speculation has been largely curbed,” said a trader in a Chinese commercial bank in Shanghai, while adding the market was still keeping an eye on the US dollar and global events, such as the first round of French presidential elections on Sunday.

Expectations of a US interest rate rise in June have faded after weaker-than-expected economic data, also helping to steady the yuan, the trader noted.

Some analysts have speculated the PBOC has opted to “synch” with the US central bank’s tightening moves to tamp down pressure on the yuan and discourage further outflows to higher yielding US assets. It raised short-term rates in March hours after a Fed policy rate hike.

The global dollar index rose to 99.7840 from the previous close of 99.7380.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.11, firmer than the previous day’s 94.04.

The offshore yuan was trading 0.04 percent firmer than the onshore spot at 6.8850 per dollar.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 7.0670, 2.66 percent weaker than the midpoint.—Reuters