China's yuan stayed flat against the dollar on Tuesday as the central bank kept holding the line, and traders expected the stability of the yuan to last until the Chinese Lunar New Year. The People's Bank of China set the midpoint rate at 6.5548 per dollar prior to market open, only 0.01 percent firmer than the previous fix 6.5557. The spot market opened at 6.5791 per dollar and was changing hands at 6.5794 at midday, almost unchanged from the previous close.
On Tuesday, the offshore yuan was trading 0.54 percent softer than the onshore spot at 6.615 per dollar. The onshore yuan weakened 0.2 percent against the euro to 7.1383. It barely moved against the Japanese yen, hovering at 5.5647 to 100 yen. "Trading was lacklustre and the spot rate stayed steady," said a trader at a foreign bank in Shanghai.
The onshore market will be closed for one week for the Chinese Lunar New Year, which falls on February 8, while the offshore market will keep trading. In a related development, China and Japan are working to create a new framework to bring together government and central bank officials to discuss economic policy co-ordination, such as steps to stabilise the yuan, the Nikkei newspaper said on Tuesday.