The yuan has softened so far this year, depreciating by nearly 3 percent up until now.

On Wednesday, it strengthened slightly by 121 basis points to 6.6555 against the U.S. dollar. As we all know, in China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day. The currency strengthened for a second consecutive day on Wednesday, as investors quoted the yuan at stronger levels after the central bank set a firmer midpoint fixing rate.

But traders are saying that corporate dollar purchases remain strong because the market still believes that the yuan would depreciate in the longer term. So investors are making use of the stronger yuan to buy the dollar.

In fact, the global dollar index fell to 94.775 from the previous close of 94.823 mainly because of the downbeat U.S. economic data. Let's now take a look at what's in store for the yuan and at which level it's likely to close at year-end.