China's yuan closed little changed against the dollar on Tuesday, with deals mostly limited to urgent business between banks and their clients ahead of the year-end, traders said. The yuan closed at 6.2339 per dollar, down four pips from Monday's close of 6.2335, as few market participants were willing to push the yuan sharply up or down.
The People's Bank of China (PBOC) marginally weakened its midpoint to 6.2931 from Monday's 6.2913, which traders said reflected an overnight rebound in the dollar index. The yuan is allowed to diverge by only 1 percent in either direction from the central bank's daily midpoint.
Tuesday's trading volume fell to $14.81 billion from a $19.95 billion on Monday, with dealers reporting more business in the afternoon as clients adjusted their forex positions for the year-end accounting period. Some traders said the central bank may guide the yuan up slightly in the final days of the year. China has long been under pressure from the United States to let the yuan appreciate to balance bilateral trade. In the past few years the PBOC has typically let the currency rise slightly in the final days of December to increase the percentage by which it strengthened in a year.
However, this year the government has repeatedly said that the yuan - which is up around 1 percent this year - has reached its fair value, and that it is no longer necessary for the central bank to intervene in trading in a large scale to guide the currency's value.
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