The yuan closed down slightly on Thursday after the People's Bank of China (PBOC) set a lower midpoint, and as traders awaited comments from the European Central Bank which is widely expected to cut interest rates later in the day. Before trading began, the PBOC set its daily midpoint 72 pips weaker at 6.3193 following a drop in the euro to a one-week low.
"Spot yuan trading is quiet. The market is waiting for the ECB," said a dealer at a Chinese commercial bank in Shanghai. The yuan closed at 6.3559, 82 pips weaker than Wednesday's close. The yuan's outlook for the third quarter will largely depend on developments in the euro zone and other global economic factors affecting the dollar, traders said.
The yuan suffered its weakest quarter on record in the second quarter, falling 0.9 percent. But traders said they saw signs of central bank intervention last week to strengthen the yuan when it approached 6.37. Offshore, one-year non-deliverable forwards (NDFs) were bid at 6.4020 and offshore deliverables of the same tenor traded at 6.4370 by late afternoon. Offshore spot yuan was at 6.3550 per dollar, near the level of onshore spot yuan.
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