The yuan closed nearly flat versus the dollar on Wednesday as the market took a wait-and-see attitude on how the People's Bank of China will pace the currency's appreciation amid signs of an economic slowdown. The yuan rose 1.94 percent against the dollar in the first half, and if appreciation slows in the second half, the currency's anticipated gains for the year will fall short of expectations. Most China-based dealers in the first quarter of this year forecast it would rise 5 to 6 percent for all 2011.
Spot yuan closed at 6.4670 on Wednesday, slightly up from Tuesday's close 6.4676. It has now appreciated 5.55 percent since it was depegged from the dollar in June 2010 and 1.89 percent so far this year. Before trade began the PBOC fixed the yuan's mid-point at 6.4715 against the dollar, weaker than a record high of 6.4650 set on Tuesday. The central bank uses the fixing to guide the currency's trading on behalf of the government. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3900 in late trade, up slightly from 6.3780 at the previous day's close. Their implied yuan appreciation in a year's time dropped to 1.27 percent from 1.47 percent.