The yuan closed up slightly against the dollar on Tuesday, led by a stronger mid-point fixing, but traders said the currency had little room to rise sharply due to a subdued economic outlook. Uncertainties caused by the euro zone debt crisis and worries over slowing growth in the domestic economy, made market players cautious about projections over the yuan's uptrend.
A firmer yuan would also stifle China's already slowing exports. "The yuan just moves around the mid-point," said a dealer at Chinese Bank in Shanghai. "The fixing only bounces around 20 pips every day, showing no signs of appreciation in the near term."
Traders said the yuan may move narrowly around 6.30 per dollar in coming weeks but could stage a mild gain of about 0.7 percent to 6.25 by the end of the first half year. A 0.7 percent rise in the yuan in the first half would lag the currency's 1.9 percent appreciation a year earlier.
Spot yuan closed at 6.2990 against the dollar, edging up from Monday's close of 6.3019. The central bank fixed its midpoint at 6.2961 on Tuesday compared with 6.2985 on Monday. It had set the fixing in a narrow range after letting it hit an all-time high of 6.2937 per dollar on February 10 ahead of a state visit by China's vice president to the United States.
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