The yuan closed down slightly against the dollar on Wednesday, with demand for the US currency in the late session offsetting a sronger mid-point fixing by the People's Bank of China. The yuan posted a 0.4 percent fall to the dollar during the month of November. It held largely steady, in line with the government's policy to keep it stable amid global economic uncertainties, including the eurozone debt crisis, which has led China to temper appreciation.
Spot yuan closed at 6.3789 per dollar, slightly weaker than Tuesday's close of 6.3778, as the dollar rose in global markets on Wednesday. The yuan's 0.4 percent monthly decline in November lagged far behind an around 4 percent rally in the US Dollar index so far this month, meaning the yuan could actually end up appreciating against China's trade-weighted basket this month as the dollar has a lion's share of the basket.
Offshore, some investors have been shorting the yuan since September as China's growth slows down amid global economic problems, including the euro zone debt crisis, raising the small possibility of a hard landing. 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 6.3950 on Wednesday, edging up from 6.3870 at the close on Tuesday, implying that the yuan would depreciate 0.73 percent in 12 months from Wednesday's PBOC mid-point, compared with a 0.61 percent fall implied on Tuesday.
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