China's yuan weakened against the dollar on Tuesday after the central bank fixed its official midpoint weaker.
The People's Bank of China set the midpoint rate CNY=SAEC at 6.3721 per dollar prior to market open, 0.07 percent weaker than the previous fix 6.3676.
The spot market CNY=CFXS opened at 6.3719 per dollar and was changing hands at 6.3731 at midday, 0.06 percent weaker than the previous close.
Traders said trading had become increasingly sluggish after the PBOC strengthened its intervention in the market of late to contain the aftermath of its abrupt devaluation of the Chinese currency in mid-August.
The market had lost the interest in pricing the yuan aggressively but would rather choosing to follow the central bank's guidance.
"All eyes are on the monetary authorities' next moves," said a trader at a foreign bank in Shanghai.
In another sign of official intentions to keep the yuan stable for now, Chinese Premier Li Keqiang reiterated on Monday that there was no basis for continued yuan depreciation and that China would not engage in a currency war.
The offshore yuan was trading 0.52 percent weaker than the onshore spot at 6.4065 per dollar.
Offshore one-year non-deliverable forwards contracts CNY1YNDFOR=, considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.5855, or 3.24 percent weaker than Tuesday's midpoint.
The yuan market at a glance:
ONSHORE:
Item Current Previous Change
PBOC midpoint 6.3721 6.3676 -0.07%
CNY=SAEC
Spot yuan 6.3731 6.3691 -0.06%
CNY=CFXS
Divergence from 0.02%
midpoint*
Spot change ytd -2.65%
Spot change since 2005 29.87%
revaluation
*Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
Instrument Current Difference
from onshore
Offshore spot yuan 6.4065 -0.52%
CNH= *
Offshore 6.5855 -3.24%
non-deliverable
forwards
CNY1YNDFOR= **
*Premium for offshore spot over onshore CNY=CFXS
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. CNY=SAEC.
original source: http://www.reuters.com/article/2015/09/22/us-markets-china-yuan-open-idUSKCN0RM04020150922