The yuan ended up against the dollar on Tuesday, even after the People's Bank of China set a marginally lower mid-point, as the dollar index dropped in early European trade. Spot yuan finished at 6.4634 on Tuesday, up from Monday's close of 6.4687. It has now appreciated 5.56 percent since it was depegged from the dollar in June 2010 and 1.95 percent so far this year.
Before trade began the PBOC fixed the yuan's mid-point at 6.4684 against the dollar on Tuesday, weaker than the previous day's 6.4680. The yuan's NEER fell 3.2 percent in the first half of the year due to a 6 percent decline in the dollar index, but a 2 percent rise in the Chinese currency against the dollar itself partly offset the overall weakness. The dollar accounts for around 70 percent of the trade-weighted basket.
Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.4000 late on Tuesday, down slightly from 6.4090 at the previous day's close. Their implied yuan appreciation in a year's time rose to 1.07 percent from 0.93 percent.