The yuan closed up against the dollar on Tuesday, scoring its biggest single-day rise in one month, amid market hopes that it would stage another leg of modest appreciation ahead of a visit to the United States by Chinese leader-in-waiting Xi Jinping in mid-February, traders said.
The yuan was seen rising past 6.30 per dollar in the coming two weeks and then pivoting in a narrow range for the rest of the first quarter as China evaluates the impact on its exports from a weak global economy and the eurozone debt crisis. Such expectations kept the yuan firmer in Tuesday trade even after the People's Bank of China set a weaker mid-point, while the Chinese currency still lost 0.23 percent in January.
Spot yuan closed at 6.3085 versus the dollar, 225 pips stronger than Monday's close or up 0.36 percent in its biggest single-day rise since the end of last year, and ignoring the PBOC's weaker mid-point of 6.3115 against Monday's 6.3056. In the offshore non-deliverable forward market, one-year NDFs traded at 6.2830 in afternoon trade, implying 0.45 percent yuan appreciation over the next year, compared with a 0.47 percent rise implied at Monday's close.
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