The yuan inched up against the dollar on Monday, supported by a stronger central bank midpoint and as the greenback struggled to bounce from last week's lows. The dollar index, which tracks the US unit against a basket of six major currencies, was off 0.2 percent to 94.094, within sight of last week's low of 94.015, which was its lowest since October.
The People's Bank of China set the midpoint rate at 6.4649 per dollar prior to the market's open, 0.13 percent firmer than the previous fix at 6.4733. The spot yuan opened at 6.4680 per dollar and was changing hands at 6.4649 at midday, up 0.05 percent from the previous close. On Monday, the onshore yuan eased 0.2 percent against the euro by midday at 7.3758. It weakened 0.8 percent against the Japanese yen, hovering at 5.9949 to 100 yen. The offshore yuan was trading 0.19 percent weaker than the onshore spot at 6.4772 per dollar. Offshore one-year non-deliverable forwards contracts, considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.657, or 2.89 percent softer from the midpoint.
Data published earlier in the day showing China's producer prices fell less than expected in March and stable consumer inflation had little impact on trading, traders said. "Trading was lacklustre," said a trader at an European bank in Shanghai. "Basically market demand and supply balanced out in the morning trade."
The latest China Foreign Exchange Trade System (CFETS)data showed that the index for the yuan's value based on the market's trade-weighted basket stood at 97.64 last week, down 0.37 percent from the week of March 28-April 1, the lowest on record. The index was first published by CFETS in December 2015 with 100 refering to the yuan's value at the end of 2014. Traders said the consensus among market players is that the yuan is slowly depreciating against the basket of trade-weighted currencies.
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