The yuan ended up slightly against the dollar on Tuesday after the People's Bank of China set the mid-point little changed in the government's latest signal that China will keep the yuan largely stable amid global economic uncertainties, traders said.
Spot yuan closed at 6.3778 per dollar, slightly stronger than Monday's close of 6.3841. It has still risen 3.32 percent so far this year and 7.03 percent since it was depegged from the dollar in June 2010. Offshore, some investors have been shorting the yuan since September as China's growth slows down amid global economic problems, including the eurozone debt crisis, raising the possibility of a hard landing, albeit small.
Benchmark offshore one-year dollar/yuan non-deliverable forwards (NDFs) have largely been forecasting yuan depreciation in a year's time since late September, reversing a trend of appreciation since the yuan's revaluation in July 2005. One-year NDFs were bid at 6.3945 on Tuesday, edging down from 6.4080 at the close on Monday, implying that the yuan would depreciate 0.56 percent in 12 months from Tuesday's PBOC mid-point, compared with a 0.77 percent fall implied on Monday.