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Yuan closes up as dollar index slips in Asian trade
February 22, 2013 / 9:16 AM / 5 years ago

Yuan closes up as dollar index slips in Asian trade

* Yuan ends at 6.2351/dollar, up 0.09 pct
    * Dollar index falls around 0.3 pct in Asian trade
    * PBOC sets midpoint 0.4 pct weaker on overnight dlr rise
    * Market sees keeping yuan stable for now

    By Lu Jianxin and Pete Sweeney
    SHANGHAI, Feb 22 (Reuters) - The yuan closed up slightly on
Friday, with a correction of the dollar in global markets
offsetting a weaker midpoint fixed by the People's Bank of China
(PBOC), traders said.
    Spot yuan finished at 6.2351 per dollar, up 0.09
percent from Thursday's close, as the dollar index 
depreciated around 0.3 percent in Asian trade.
    Trading was sluggish, with volume down to $12.65 billion
from Thursday's $13.5 billion. Traders said this was partly
because recent global dollar volatility has made many companies
take a wait-and-see attitude towards the yuan's long-term value.
    Before trading began, the PBOC set the yuan's midpoint at
6.2871, or 0.04 percent weaker than Thursday's midpoint of
6.2846, a move traders said reflected an overnight dollar rally.
    "Many players stayed on the sidelines today as global dollar
uncertainties dampened interest in yuan/dollar trading," said a
dealer at a U.S. bank in Shanghai.
    "The market sees the PBOC keeping the yuan relatively stable
for now, but players have become increasingly dubious that the
yuan will continue to appreciate in the longer term," he said.
  The onshore spot yuan market at a glance: 
 Item               Current   Previous  Change
 PBOC midpoint        6.2871    6.2846   -0.04
 Spot yuan            6.2351    6.2405   +0.09
 Divergence from       -0.83                  
 Spot change YTD       -0.08                  
 Spot change since 2005 revaluation     +32.74
 *Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The PBOC allows the exchange rate to rise or fall 1 percent from
official midpoint rate it sets each morning.

    The offshore yuan traded in Hong Kong (CNH)          remains
at a premium to the onshore version but the premium has recently
narrowly sharply due to the global dollar's strength.
    One-year non-deliverable forwards, considered an imperfect
indicator of future expectations for yuan appreciation or
depreciation, were quoted at rates implying depreciation over
the next 12 months.
The offshore yuan market at a glance:    
 Instrument                Current     Difference from
                                       onshore (pct) 
 Offshore spot yuan        6.2340      +0.02*
 Offshore non-deliverable  6.3221      -0.56**
*Premium for offshore spot over onshore 
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
    - G20 promises unlikely to end devaluation debate
    - China restrains yuan rise in response to Asian currency 
    - Spot yuan has rallied strongly since late July 2012, and
the PBOC is using its daily midpoint to restrain further
appreciation. GRAPHIC:
    - China's trade surplus surged in late 2012, but the surge
was mainly due to weak imports rather than strong exports.
    - Corporate yuan purchases still exceed dollar purchases,
but the gap is narrowing. Exporters are converting progressively
smaller portions of their foreign exchange receipts into yuan.
    - Hot money outflows may be putting downward pressure on the
yuan. GRAPHIC:
    - Despite relatively stable dollar/yuan exchange rate, the
yuan is appreciating on a trade-weighted basis. GRAPHIC:

 (Editing by Richard Borsuk)

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