Yuan slightly down

The yuan ended down slightly against the dollar on Monday after China's central bank set the mid-point little changed as Chinese President Hu Jintao indicated that the government may keep the yuan exchange rate stable for a while. Before trading began, the PBOC set the mid-point at 6.3301, slightly higher than Friday's 6.3317. The central bank uses the fixing to signal the government's intentions for the yuan.
Spot yuan has now risen 3.71 percent so far this year and 7.43 since the it was depegged from the dollar in June 2010. Steady yuan gains pushed Chinese firms to sell most of the dollars they earned until the worsening of the euro debt crisis sparked a global dollar rally in September. Offshore one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3360, up slightly from 6.3260 at the close on Friday. They now implied that the yuan would largely remain unchanged in 12 months from the PBOC's mid-point. Offshore dollar/yuan forwards have typically forecast yuan appreciation in the past few years. But it has largely implied yuan depreciation since the dollar rally in September.