Yuan ends nearly unchanged in active trading, narrow movement seen

SHANGHAI, Jan 24 (Reuters) - The Chinese yuan closed almost unchanged in active trade on Thursday after the central bank set a slightly weaker official midpoint to reflect a small rise in the dollar index the day before. Traders said both banks and their clients expect the yuan to move narrowly in the near term and were willing to do business at current levels. News that growth in China's giant manufacturing sector accelerated to a two-year high in January had no impact on trade, traders said. Instead, market players and regulators at the People's Bank of China (PBOC) are focused on following trends in the dollar index, which tracks the greenback against a basket of currencies dominated by the euro, they said. Spot yuan closed at 6.2181 per dollar, 1 pip weaker than Wednesday's close of 6.2180. Trading volumes rose to a heavy $20.29 billion, up from Wednesday's $17.72 billion.

The onshore spot yuan market at a glance:

Item Current Previous Pct change

close

PBOC midpoint 6.2783 6.2762 -0.03 Spot yuan 6.2181 6.2180 0.00 Divergence from midpoint +0.96

(pct)*

Spot change ytd (pct) +0.20 Spot change since 2005 +33.10

revaluation (pct)

* The People's Bank of China (PBOC) allows the exchange rate to rise or fall 1 percent from the official midpoint rate it sets each morning.

OFFSHORE CNH MARKET

Offshore spot yuan dropped slightly but continued

to trade at a premium to the onshore spot and one-year

non-deliverable forwards trading nearly at par with

the midpoint.

The offshore yuan market at a glance:

Instrument Current Difference from onshore Offshore spot yuan 6.2070 +0.19

(pct)

Offshore 6.2837 -0.11

non-deliverable forwards (pct)

* The difference between offshore spot and the onshore spot

** Offshore one-year non-deliverable forwards (NDFs) reflect market expectations for appreciation or depreciation of PBOC's official midpoint.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> -- Forces underpinning yuan rally to lose steam in 2013

-- Offshore yuan premium returns as market bets on appreciation -- Spot yuan has rallied strongly since late July 2012, and the PBOC is using its daily midpoint to restrain further appreciation. GRAPHIC: http://link.reuters.com/pyx74t -- China's trade surplus surged in late 2012, but the surge was mainly due to weak imports rather than strong exports. GRAPHIC: http://link.reuters.com/qav68s -- Corporate yuan purchases still exceed dollar purchases, but the gap is narrowing. Exporters are converting progressively smaller portions of their foreign exchange receipts into yuan. GRAPHIC: http://link.reuters.com/syx74t -- Hot money outflows may be putting downward pressure on the yuan. GRAPHIC: http://link.reuters.com/saz74t -- Despite relatively stable dollar/yuan exchange rate, the yuan is appreciating on a trade-weighted basis. GRAPHIC: http://link.reuters.com/sed74t

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(Reporting by Lu Jianxin and Pete Sweeney; Editing by Sanjeev Miglani)