The yuan closed slightly weaker against the dollar on Tuesday after trading below the People's Bank of China's mid-point as the market awaited the central bank's signal for another leg of yuan appreciation against the dollar, traders said. The yuan has hit a slew of record highs this year but the PBOC set weaker mid-points this week, indicating a gradualist approach to managing yuan appreciation, they said.
At its peak last Friday, the yuan hit 6.5067 per dollar. The PBOC is typically cautious ahead of key barriers, traders said, normally allowing for a period of consolidation. Spot yuan closed at 6.5287, slightly weaker than Monday's close of 6.5277. It saw on Monday its most volatile trade since last November, caused by a sudden burst of dollar demand from banks' clients. The currency has now risen 4.55 percent since it was depegged from the dollar in June 2010, and 0.93 percent since the start of this year.
Offshore, one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3400 in late trade, up from 6.3290 at the previous close. Their implied yuan appreciation in a year's time fell to 2.79 percent from 2.97 percent, echoing yuan consolidation in onshore spot yuan, traders said.