SHANGHAI: The yuan ended little changed against the dollar on Wednesday, after the People's Bank of China set a weaker mid-point and the dollar index hit a one-month high as the euro zone debt crisis threatened to engulf top-rated members.
Dealers said the weaker mid-point also indicated China's stance, that it would continue to control the pace of yuan rises even as the US president Barack Obama pressured China over its currency and trade policies during the APEC summit.
"China has sent a very strong signal that it will not let the yuan rise or fall too much due to a slowdown in the domestic economy," said a dealer at a Chinese commercial bank in Shanghai.
China's weaker exports outlook was also a reason for the central bank to keep the yuan stable for now.
The Ministry of Commerce said on Wednesday that China's exports outlook was not optimistic for the rest of this year and the early part of next year.
Spot yuan finished at 6.3456 per dollar, down from Tuesday's close of 6.3465. It has now risen 3.78 percent so far this year and 7.57 percent since it was depegged from the dollar in June 2010.
Before trading began, the central bank set the mid-point at 6.3509, compared with Tuesday's 6.3436. The authorities have set the mid-point below the level of 6.34 for the past two weeks.
Traders now see the yuan appreciating to around 6.30 versus the dollar by the year-end, implying it is set to rise 4.6 percent in 2011. But that lags a 5 to 6 percent appreciation that dealers had expected for the most part of this year.
Offshore one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3300 late on Wednesday, down slightly from 6.3470 at the close on Tuesday.
They now implied that the yuan would largely remain unchanged in 12 months from the PBOC's mid-point.
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