The yuan ended little changed versus the dollar on Tuesday, as strong demand for the US currency from large companies offset a stronger midpoint set by the People's Bank of China in its daily fixing. China has signalled that it will gradually create greater fluctuations in the yuan, and the PBOC has recently allowed the daily midpoint to move largely in line with the US dollar's movements against other currencies.
Spot yuan ended at 6.3241 against the dollar, almost flat from Monday's close of 6.3233. Before trading began on Monday, the PBOC set the yuan's midpoint at 6.3029, up slightly from 6.3082 previously. The midpoint is the daily base rate from which the dollar/yuan exchange rate may rise or fall 0.5 percent in a day, and is used by the PBOC to help express the government's intentions for the currency's value. While the dollar's recent strength clearly suggested higher demand for the US dollar, pushing the yuan down from its mid-point for the past couple of days, the outlook for the yuan is still unclear, traders said.
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