The yuan ended up against the dollar but fell versus the euro and yen on Tuesday, guided by the Chinese central bank's reference rates, as the dollar index hit a fresh low of more than three months in early European trade. The People's Bank of China set the yuan's mid-point, or its reference rate from where the Chinese currency can rise or fall 0.5 percent against the dollar in a day, at 6.7722 from Monday's 6.7742 to reflect the dollar's global weakness.
Since the PBOC announced a depegging of the yuan to the dollar on June 19, it has let the yuan appreciate 0.79 percent against the US currency, but it guided the yuan lower by more than 5 percent against the euro and more than 4 percent to the yen. Guided by the central bank, spot yuan closed at 6.7730 against the dollar, up slightly from Monday's close of 6.7742. It closed down at 8.9592 versus the euro from 8.8500 and dropped to 7.8738 against the yen from 7.8072. Since the depegging, the yuan has mostly moved in a relatively wider daily range of more than 50 pips compared with only a few pips previously.
PBOC Deputy Governor Hu Xiaolian said in remarks published on Tuesday that China needed to expand the trading range of the yuan against the dollar in future, although she did not give a timeframe. Offshore, benchmark one-year dollar/yuan non-deliverable forwards were quoted bid at 6.6720 in late trade from Monday's close of 6.6645, with their implied 12-month yuan appreciation falling to 1.50 percent from 1.65 percent. Dollar/yuan NDFs rose on Tuesday after they dropped sharply to a two-week low in intraday trading on Monday as uncertainty over China's yuan policy kept markets trading within an established range, dealers said.
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