Yuan up in active trading as PBOC signals year-end strength
* PBOC midpoint points to slight yuan rise at year-end
* Stronger yuan sparks corporate trading interest
* Half-day volume rises to $7.3 billion from $3.7 billion
SHANGHAI, Dec 28 (Reuters) - China's yuan firmed against the dollar on Friday morning after the central bank set a slightly stronger midpoint, a move that traders said signalled authorities intend to allow the yuan to end up by about 1 percent for the year.
China has long been under pressure from the United States to let the yuan appreciate to balance bilateral trade. In past years, the central bank has typically let the currency rise slightly in the final days of December to increase the percentage by which it strengthened for the year.
The yuan stood at 6.2312 per dollar at midday, up from Thursday's close of 6.2360, up 1 percent year-to-date.
The People's Bank of China (PBOC) strengthened its midpoint to 6.2896 from Thursday's 6.2949. The exchange rate is allowed to diverge by only 1 percent in either direction from the central bank's daily midpoint.
Trading volume jumped to $7.3 billion on Friday morning from $3.7 billion on Thursday morning.
"Some companies felt the yuan is now at the right rate for doing business," said a trader at a Chinese commercial bank in Shanghai. "Their interest helped push trading volumes up."
The yuan has generally moved sideways this week in the run-up to a long holiday next week. The domestic foreign exchange market will be closed for the New Year's Day holiday from Tuesday to Thursday next week, leaving only two trading days for the week.
Offshore one-year non-deliverable forwards were quoted at 6.3281, implying the yuan will depreciate over the next 12 months.
The offshore yuan changed hands at 6.2270. The CNH has been at a premium to the onshore spot since late November, but the spread has narrowed significantly as optimism about the yuan's future value moderated in the face of uncertainty over the U.S. budget debate.
If the U.S. cannot reach a deal on its budget, economists warn it could push the world's largest economy back into recession, which would encourage investors to seek safe haven in dollar-denominated assets.