The yuan ended at a new high against the dollar on Monday as investors saw little room for prolonged weakness after the Chinese currency was earlier pushed lower by a surging dollar. But the yuan still traded within a narrow range around 6.33 to 6.35 on Monday, underlining the central bank's intention to keep the Chinese currency stable.
Spot yuan ended at 6.3378 against the dollar, up from 6.3484 at the close on Friday. It has still risen 3.97 percent so far this year and 7.71 percent since it was depegged in June 2010. Before trading began, the PBOC fixed the day's mid-point at 6.3303, stronger than Friday's 6.3352. The central bank uses the fixing to express the government's intention for the yuan's daily movement.
Benchmark offshore one-year dollar/yuan non-deliverable forwards (NDFs) have largely been forecasting yuan depreciation in a year's time since late September, reversing a trend of appreciation since the yuan's revaluation in July 2005. One-year NDFs were bid at 6.4170 on Monday against 6.4060 at the close on Friday, implying that the yuan would depreciate 1.37 percent in 12 months from Thursday's PBOC mid-point, compared with a 1.20 percent fall implied on Friday.
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