The yuan ended slightly lower against the dollar on Monday after the People's Bank of China set its midpoint sharply lower, the biggest single-day percentage fall in 16 months, a move traders said signalled the government may allow a wider trading range. Spot yuan ended at 6.3067 versus the dollar around midday on Monday, weaker than Friday's close of 6.2982.
Before trading began, the PBOC set the yuan's daily midpoint at 6.3121 to the dollar, down 0.22 percent from Friday's 6.2980, the fixing's biggest single-day fall since late 2010. In the offshore non-deliverable forwards (NDF) market, the benchmark one-year NDFs implied yuan appreciation of 0.42 percent late on Monday, down slightly from 0.51 percent they implied at Friday's close.
The central bank has kept the yuan stable within a tight range, in line with the government's policy to avoid any negative impact of a volatile exchange rate on the country's economy. "While the yuan may move in a relatively wider range, its eventual appreciation against the dollar will remain limited in line with Premier Wen's call for stability."
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