SHANGHAI: China's yuan was little changed against the dollar in thin trade on Friday, as many overseas markets have entered Christmas holidays and an extended long weekend.
Before the market opened, the People's Bank of China (PBOC) set the midpoint rate at 6.3692 per dollar, 41 pips weaker than the previous fix of 6.3651. That was 31 pips softer than Reuters' estimate of 6.3661.
In the spot market, the onshore yuan opened at 6.3730 per dollar and was changing hands at 6.3700 at midday, 5 pips weaker than the previous late-session close.
The spot yuan swung in a range of about 30 pips on Friday morning, while trading volume shrunk to $10.6 billion from a normal half-day volume of about $15 billion.
Several market participants said trading was slow, as many of their peers have already gone on year-end holidays, while overseas markets also lacked clear guidance.
Although the yuan is on course for a marginal weekly gain against the dollar, a trader at a Chinese bank said markets are anticipating some FX policy tweaks in the new year, especially after Premier Li Keqiang's comments on growing uncertainties in China's foreign trade.
The latest state council meeting also reiterated that the yuan exchange rate will be kept basically stable, and banks are encouraged to conduct deals in the forward market to help exporters better cope with currency fluctuations risks.
"We expect China to implement proactive fiscal policy and prudent monetary policy with a loosening bias next year, while keeping the yuan exchange rate basically stable at a reasonable and balanced level to revive and sustain economic growth," said Gao Qi, FX strategist at Scotiabank.
He maintains his short USD/CNH spot position, with a target of 6.30 per dollar and a trailing stop of 6.42.
By midday, the broad dollar index fell to 96.044 from the previous close of 96.104, while the offshore yuan was trading at 6.3757 per dollar.
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