SHANGHAI: The yuan closed down slightly against the dollar on Thursday after the People's Bank of China let the mid-point return to the 6.30 level, guiding the yuan's movements within a tight range.
Dealers widely expect the yuan to move narrowly around 6.3 against the dollar for the rest of the first quarter as global economic weakness affects China's growth prospects.
"The market has turned calm again," said a dealer at a Chinese bank in Shanghai. "We don't see any reasons for the central bank to let the yuan rise sharply for now, especially because exports are faring poorly."
HSBC's February flash PMI data showed that the new export orders sub-index dropped to 47.4 -- the lowest in eight months -- from 50.4 in January as the European debt crisis cast a shadow over Chinese exports.
Spot yuan closed at 6.2985 against the dollar versus Wednesday's close of 6.2960 after the central bank fixed the mid-point slightly weaker at 6.3031 compared with 6.2988 previously .
The yuan has risen 8.35 percent since its June 2010 de-peg.
The PBOC has set the mid-point in a narrow range after letting it hit an all-time high of 6.2937 per dollar on Feb. 10, which markets construed as a goodwill gesture to the United States ahead of Chinese leader-in-waiting Xi Jinping's visit to that country last week.
In the offshore non-deliverable forwards (NDF) market, the benchmark one-year NDFs implied yuan appreciation of 0.37 percent in afternoon trade, unchanged from the level it implied at Wednesday's close.
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