Yuan closes at one-month low as PBOC seen buying dollars
* Yuan falls to 6.2451/dlr on apparent c.bank intervention
* Surge of volume in final minutes bears PBOC signature
* But unclear if month-long standoff is over
* CNOOC-Nexen deal could spark heavy dollar demand
(Updates to close)
SHANGHAI, Dec 10 (Reuters) - The yuan closed at its weakest level in over a month on Monday after the central bank appeared to buy dollars in the session's final minutes, extending a pattern of intervention when trading volumes are low.
Spot yuan plunged in the final half hour of trade to close at 6.2451 versus the dollar, sharply weaker than Friday's close of 6.2301.
For virtually the entire day until late afternoon, the yuan had remained at 6.2293, the strongest level permitted by the official trading range set by the central bank, with little trade occurring.
The deadlock may have pushed the People's Bank of China (PBOC) into injecting yuan liquidity, which it has done sporadically in recent weeks when it appeared trading might otherwise grind to a halt.
Monday's midpoint was set at 6.2922. The central bank allows the exchange rate to rise or fall by no more than 1 percent from the midpoint it sets each morning.
Liquidity has been weak in recent weeks, as market players have been unwilling to bid for dollars at the price permitted by the central bank's midpoint. For 30 of the last 33 trading sessions, the yuan has hit the limit-up of the daily trading range.
But trading volume reached a healthy $12.2 billion by the end of Monday, much higher than the $355 million turnover through midday.
Monday's apparent intervention notwithstanding, traders say that the PBOC is determined to scale back such action and wants the market to digest the glut of dollars in the market without the central bank having to buy them itself.
While market players holding long dollar positions were pleased to be able to reduce them somewhat on Monday, it's too early to tell if PBOC's actions signal a decisive end to the deadlock.
The PBOC would have to sustain its dollar buying for an extended period -- effectively committing to defend the dollar near Monday afternoon's stronger level -- before the market can operate normally again, traders say.
Following previous apparent PBOC interventions in recent weeks, the yuan has quickly returned to its top end limit on the following day.
PENT-UP DOLLAR DEMAND
Even without central bank intervention, some believe that pent up dollar demand could re-emerge at the end of this month or early next month.
Oil companies typically have USD accounts payable due near year-end. Such firms have been delaying dollar purchases in expectation of further yuan gains, but will eventually have to buy dollars at the price available, said a trader at a major state-owned bank in Beijing.
She also cited the acquisition of Canadian energy company Nexen Inc by Chinese oil giant CNOOC, just approved by the Canadian government, as a potential big source of dollar demand.
"That's more than $13 billion. If they (CNOOC) go to the market for that, it should open things up," she said.
But if oil-related dollar demand doesn't appear, the deadlock could continue through the end of the year, as many other firms still have long dollar positions that they have yet to unwind.
Those positions were accumulated earlier in the year when the yuan was falling.
The yuan has now risen 0.8 percent in 2012 and 2.4 percent since touching a 2012 low point of 6.3967 in late July.
(Editing by Sanjeev Miglani)