The yuan ended down slightly against the dollar on Tuesday, even though the People's Bank of China set the mid-point at a new peak, with dealer reporting large dollar demand from corporate clients. Spot yuan ended at 6.4810 versus the dollar, weaker than Friday's close of 6.4796. It has now appreciated 5.33 percent since it was depegged from the dollar in June 2010, and 1.65 percent since the start of this year. Markets were shut for the Dragon Boat Festival on Monday.
Before trade began, the PBOC set the yuan's daily mid-point at a record high of 6.4816 against the dollar, stronger than Friday's 6.4846. The central bank uses the mid-point to guide the currency. Dealers said they expected the yuan was likely to move around 6.47 to 6.48 in the near term, underpinned by the central bank's guidance for gradual yuan appreciation. Offshore, one-year non-deliverable forwards (NDFs) were bid at 6.3585, little changed from Friday's close of 6.3540. Their implied yuan appreciation in a year's time eased to 1.93 percent from 2.0 percent.