SHANGHAI: The yuan was little changed against the dollar on Wednesday after the People's Bank of China set a weaker mid-point as the market waited to see when the central bank would let the yuan start a new rising cycle.
Spot yuan was little changed at 6.5724 versus the dollar by midday against its previous close of 6.5727. The currency has risen 3.9 percent since it was depegged in June 2010.
Before trading began, the PBOC set the yuan's mid-point at 6.5718 versus the dollar, weaker than Tuesday's 6.5679. "There are many uncertainties, such as Japan, inflation, so we can only wait for the central bank's next step," said a dealer at a Chinese commercial bank in Shanghai. "For now, the mid-point still shows it is moving in a stable manner." Traders expect the daily fixing to hit a new peak soon as Beijing appears to be using the yuan to help fight imported inflation propelled by high global commodity prices.
Late on Tuesday, the Bank for International Settlement showed that the yuan's nominal effective exchange rate (NEER), or its value against a trade-weighted basket, edged down 0.3 percent in February to 113.22, up from last month's 113.6.
Traders said the fall in the yuan's NEER in February was mainly driven by a weak dollar index in global markets, when it declined 1.1 percent.
NEER is a currency's nominal exchange rate against a basket of trade-weight currencies. In the Chinese case, the dollar dominates in the basket by a weight of about 70 percent.
Benchmark one-year dollar/yuan non-deliverable forwards (NDF) were bid at 6.4570, edging up from 6.4490 at Tuesday's close. Their implied yuan appreciation in a year's time fell to 1.8 percent, from Tuesday's 1.9 percent.
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