SHANGHAI: China's yuan was little changed on Wednesday, with traders saying that supply and demand for yuan is roughly in balance despite data showing a larger-than-expected trade surplus in January.
Spot yuan changed hands at 6.0617 per dollar at midday on Wednesday, 0.02 percent weaker than Tuesday's close. The exchange rate fluctuated within a narrow range between 6.0625 and 6.0603 during morning trade.
The tiny fall in the yuan's value closely tracked the central bank's daily midpoint, which was set at 6.1078, 0.01 percent weaker than Tuesday's fixing.
Traders say the nearly flat midpoint signals the central bank's intention to hold the yuan roughly steady in the near term, as China's economy and foreign capital inflows both show signs of slowing.
The mild fall in the yuan occurred despite trade data on Wednesday which showed China's trade surplus rose to $31.9 billion in January, well above forecasts of $23.7 billion and December's $25.6 billion.
Previous month data doesn't necessarily reflect current conditions. Traders say corporate demand for dollars and yuan -- which is mainly driven by trade flows -- is roughly balanced at the moment.
China's central bank also appears to favor stability as it seeks to prevent the capital outflows that have afflicted other emerging markets in recent weeks. Traders expect the yuan to hover around 6.06 in the coming weeks.
China's trade performance zoomed past forecasts in January as import growth hit a six-month high, confounding market expectations that the world's second-largest economy is mired in a deepening slowdown.
However, analysts who had expected the Lunar New Year holiday to drag on the month's trade flows cautioned that the data may have been inflated by fake transactions, where traders forge deals so as to sneak cash into the country past capital controls.
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