The yuan ended down slightly against the dollar on Tuesday after the People's Bank of China set the mid-point marginally lower, but the Chinese currency is expected to stay relatively strong bolstered by long-term policy objectives. Dealers said the yuan has potential to appreciate further as the government expands the currencies against which it is traded, as it takes steps to internationalise the yuan.
Spot yuan ended at 6.3608 per dollar, weaker than Monday's close of 6.3600. It has risen 3.60 percent so far this year and 7.32 percent since it was depegged from the dollar in June 2010. Before trading began, the central bank set the mid-point at 6.3555, compared with Monday's 6.3522. China has halted the yuan's rise since early November, when the mid-point hit a record high of 6.3165. Offshore one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3630 on Tuesday, unchanged from Monday close. They now implied that the yuan would largely remain unchanged in 12 months from Thursday's PBOC mid-point.
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