Yuan slightly lower

The yuan closed a tad lower versus the dollar on Thursday as the People's Bank of China fixed its mid-point marginally weaker for the third straight day, giving the currency a pause after a slew of record highs. Traders said the central bank may be preparing for a new leg of yuan appreciation during the US-China Strategic and Economic Dialogue both as a goodwill gesture to the United States and as an extension of recent gains this year.
Spot yuan closed at 6.4937 versus the dollar, down slightly from Wednesday's close of 6.4933. It has now appreciated 5.12 percent since it was depegged from the dollar in June 2010, and 1.46 percent since the start of this year. Before trade began, the PBOC set the yuan's daily mid-point at 6.5025 against the dollar, slightly weaker than Wednesday's 6.5013. The central bank uses the mid-point to express the governments' intention for the yuan's movements. Offshore, one-year non-deliverable forwards (NDFs) were bid at 6.3410 in late trade, up from 6.3290 at the previous close. Their implied yuan appreciation in a year's time fell to 2.55 percent from 2.74 percent.