Yuan little changed; c.bank favors stability amid regional declines
* China's yuan little changed at 6.1321/dlr
* PBOC holds midpoint steady despite dollar gains
* PBOC wants stability amid fall in Asian stocks
* Possible QE tapering pressures Asian currencies
SHANGHAI, July 3 (Reuters) - China's yuan was little changed on Wednesday after the central bank's recent fixings signalled a desire for stability amid falls in emerging Asian equities and currencies. Spot yuan traded at 6.1321 per dollar near midday, up 0.01 percent from Tuesday's close. The People's Bank of China (PBOC) fixed its midpoint at 6.1803 per dollar on Wednesday, 0.05 percent weaker than Tuesday's fix. Wednesday's midpoint was nearly identical to Monday's fix of 6.1803, even though the dollar index, which tracks the greenback's value against a basket of major currencies, rose to its highest level since late May early on Wednesday.
"The central bank has signalled it wants to keep the yuan stable for now," said a dealer at a city commercial bank in Shanghai. The desire for stability is likely motivated in part by falls in Asia-Pacific markets on Wednesday. At 0600 GMT, MSCI's broadest index of Asia-Pacific shares outside Japan was down 2.1 percent, putting it well below Tuesday's near two-week high. The PBOC has traditionally fixed the yuan weaker in response to gains in the dollar, but the link has weakened this year.
The onshore spot yuan market at a glance:
Item Current Previous Change (pct) PBOC midpoint 6.1803 6.1773 -0.05 Spot yuan 6.1321 6.133 +0.01
Divergence from midpoint* -0.78 (pct)
Spot change ytd +1.60 Spot change since 2005 revaluation +34.97
*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 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 6.1335 -0.02 Offshore non-deliverable 6.3015 -1.92
*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 Richard Borsuk)