The yuan ended slightly down against the dollar on Tuesday after the People's Bank of China set a weaker mid-point, but the Chinese currency was mostly confined to a narrow range. Spot yuan ended at 6.3472 against the dollar, down slightly from 6.3378 on Monday. The yuan has still risen 3.82 percent so far this year and 7.55 percent since it was depegged in June 2010.
Before trading began, the PBOC fixed the day's mid-point at 6.3351, slightly lower than Monday's 6.3303. The central bank uses the fixing to express the government's intention for the yuan's daily movement. Benchmark offshore one-year dollar/yuan non-deliverable forwards (NDFs) have largely been forecasting yuan depreciation in a year's time since late September, reversing a trend of appreciation since the yuan's revaluation in July 2005. One-year NDFs were bid at 6.3920 against the previous close of 6.4170, implying that the yuan would depreciate 0.90 percent in 12 months from the PBOC's mid-point, compared with a 1.29 percent fall implied on Monday.