Yuan ends down for fourth day as doubts about Chinese economy weigh
* Tight money-market liquidity sparks worries over economy
* Plunge in China's stock market reflects market panic
* Yuan is down 0.4 pct since record high on June 3
SHANGHAI, June 25 (Reuters) - The yuan closed marginally lower against the dollar on Tuesday for the fourth straight session as worries over the health of China's finance system and the economy offset a stronger official midpoint set by the central bank, traders said. Spot yuan finished at 6.1453 versus the dollar, slightly weaker than Monday's close of 6.1451 even though the People's Bank of China (PBOC) fixed its official midpoint at 6.1767, firmer than Monday's 6.1807. Since the start of June, tight liquidity in China's money markets and the central bank's clear choice not to aid the market have sparked worries over the health of the world's second-largest economy. China's stock market has also plunged since late last week. "With the PBOC taking such a hardline stance on liquidity, investors have become increasingly worried about the health of China's financial system as well as its economic growth," said a trader at a Chinese commercial bank in Shanghai. "So the yuan is likely to see slight weakening in the near term, ending a recent round of appreciation." Still, there is little indication that the yuan is facing the same downward pressure as other emerging Asian currencies. The Malaysian ringgit, Singapore dollar, Philippine peso and Korean won have all fallen steeply since mid-May, when the market began to anticipate that the Federal Reserve may soon begin to taper its bond buying programme. The PBOC guided the yuan stronger from early April to late May, ahead of a slew of major political events, including a G20 meeting and Chinese President Xi Jinping's visit to the United States. But the yuan has fallen 0.4 percent since June 3 when it matched a record high of 6.1210, first hit on May 27.
The onshore spot yuan market at a glance:
Item Current Previous Change (pct) PBOC midpoint 6.1767 6.1807 +0.06 Spot yuan 6.1453 6.1451 -0.00
Divergence from midpoint* -0.51 (pct)
Spot change ytd +1.38 Spot change since 2005 revaluation +34.68
*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 1 percent from the official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
The offshore yuan market at a glance:
Instrument Current Difference from onshore
Offshore spot yuan 6.1417 +0.06* Offshore non-deliverable 6.2980 -1.93**
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. .
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RECENT DEVELOPMENTS - Yuan rally starts to fade as capital inflows to China slow
- ANALYSIS-Bullish yuan herd leaves China fundamentals in the dust - Currency war or no, Beijing doesn't want Asia to take stable yuan for granted - China opens new front in money war as yuan speculation distorts export data
KEY DATA POINTS - Gap between PBOC midpoint and spot rate is narrowing. GRAPHIC: http://link.reuters.com/qyx74t - China's trade surpluses mainly driven by weak imports rather than strong exports. GRAPHIC: http://link.reuters.com/qav68s - Corporate FX purchases in May show reduction in yuan appreciation expectations. GRAPHIC: http://link.reuters.com/tyx74t - Hot money inflows turn to outflows in May 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
(Editing by Jacqueline Wong)