The yuan closed flat on Tuesday after rising in morning trading as traders took advantage of a weaker dollar index in the afternoon. The People's Bank of China (PBOC) has fixed the yuan midpoint at successively stronger levels for the last three trading days, after the yuan set a record decline against the dollar in May. But spot prices have stubbornly resisted stronger guidance as markets wait for signs of direction from Europe.
The yuan hit its highest level against the euro since early 2002 in late May. The yuan was fixed at 6.3225 in the morning, but spot prices continued their custom of trading far below the midpoint, as they have consistently done since mid-March. However, volatility tightened further on Tuesday, trading in a range between 6.3625 and 6.3584 by midday. The yuan closed at 6.3675, 35 pips weaker from Friday's close. Yuan 1-year non-deliverable forwards also strengthened slightly, implying depreciation of around 0.5 percent.