The yuan ended down slightly against the dollar on Tuesday, even though the People's Bank of China set a record high mid-point as market players expected that uncertainty in global markets could restrain yuan gains in the future. Dealers also said some dollar demand from their clients in the session kept spot yuan rangebound.
"Client demand is a reason, and the dollar index also rebounded further on uncertainties in global markets," said a dealer at a Chinese bank in Shanghai. China's central bank reiterated in a statement to summarise its monetary policy meeting for the second half that it would keep the yuan exchange rate basically stable. Spot yuan ended at 6.4676 on Tuesday, weaker than 6.4629 at the close on Monday when it hit an intraday record high of 6.4599. It has now appreciated 5.54 percent since it was depegged from the dollar in June 2010 and 1.89 percent so far this year.
Before trade began the PBOC fixed the yuan's mid-point at a record high of 6.4650 against the dollar, stronger than the previous day's historical high of 6.4661. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3780 in late trade, up slightly from 6.3725 at the previous day's close. Their implied yuan appreciation in a year's time fell slightly to 1.36 percent from 1.45 percent.