Yuan rebounds to support at 6.15/dlr after six straight days of falls
* Stronger PBOC midpoint guides yuan up
* PBOC does not want heavy yuan weakening - traders
* Yuan still down 0.2 pct so far in June
* PBOC chief says yuan convertibility reform to quicken
SHANGHAI, June 28 (Reuters) - China's yuan rebounded on Friday, finding support at the psychologically-important 6.15-per-dollar level following six straight days of weakening. The People's Bank of China (PBOC) fixed its official midpoint stronger to guide the yuan's rebound, in a sign that the central bank is unlikely to let the yuan weaken substantially, despite having backed off its previous support for appreciation. Spot yuan was trading at 6.1450 versus the dollar at midday, 0.07 percent firmer from Thursday's close, after the PBOC fixed its official midpoint at 6.1787, slightly stronger than Thursday's fix of 6.1797. The PBOC guided the yuan stronger from early April to late May, ahead of several major political events, including a G20 meeting and Chinese President Xi Jinping's visit to the United States, but has let it fall 0.2 percent so far this month. The yuan is still up 1.1 percent so far in the second quarter. Beyond the slight rebound on Friday, the weaker guidance for the yuan this month may be an effort by the PBOC to hold the yuan at least somewhat steady against other Asian currencies, traders said. The Korean won, Malaysian ringgit, Singapore dollar, and Philippine peso have all slipped against the dollar since mid-May by much more than the yuan's 0.46 percent decline. That means China's yuan has strengthened against the currencies of its neighbours. Capital has exited from emerging markets in recent weeks amid concerns that the U.S. Federal Reserve may taper its bond buying. Traders also said the yuan's volatility in the second quarter may be a move by Chinese authorities to test the waters for a more flexible exchange rate regime in which the yuan could rise and fall sharply. PBOC governor Zhou Xiaochuan told a financial forum in Shanghai on Friday that Beijing would accelerate process of making the yuan fully convertible but did not elaborate.
The onshore spot yuan market at a glance:
Item Current Previous Change (pct) PBOC midpoint 6.1787 6.1797 +0.02 Spot yuan 6.1450 6.1490 +0.07
Divergence from midpoint* -0.55 (pct)
Spot change ytd +1.39 Spot change since 2005 revaluation +34.69
*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 6.1415 +0.06* Offshore non-deliverable 6.2954 -1.85**
*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 Eric Meijer)