Yuan edges up, seen trading in narrow range in near term
* Dollar supply offsets slightly weaker PBOC midpoint
* Yuan seen moving around 6.14/dollar next week
* Dealers see yuan ending 2013 with around 2 pct gain
SHANGHAI, July 19 (Reuters) - The yuan edged higher against the dollar on Friday as dollar sales by exporters offset a slightly weaker central bank midpoint, traders said. Spot yuan changed hands at 6.1392 versus the dollar at midday, rising 0.03 percent from Thursday's close even though the People's Bank of China (PBOC) fixed the official daily midpoint at 6.1751, or 0.05 percent weaker than Tuesday's fix. "The market appears to have lost direction and is likely to move narrowly around 6.14 next week," said a dealer at a Chinese commercial bank in Shanghai. Many dealers expect the Chinese currency to remain largely flat in coming months or fall slightly, but to then strengthen to around 6.1 versus the dollar, a 2 percent gain for all of 2013. So far this year, the yuan has strengthened 1.48 percent.
After the yuan rallied strongly in April and May, the PBOC has held it in a narrow range, amid a slowdown in economic growth.
The onshore spot yuan market at a glance:
Item Current Previous Change PBOC midpoint 6.1751 6.1720 -0.05% Spot yuan 6.1372 6.1413 +0.03% Divergence from -0.58%
Spot change ytd +1.48% Spot change since 2005 revaluation +34.81% *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 most recent CNH Tracker column, following the offshore yuan market, can be downloaded here: http://link.reuters.com/ser59t
The offshore yuan market at a glance:
Instrument Current Difference from onshore Offshore spot yuan 6.1392 0.00%* Offshore non-deliverable 6.2775 -1.63%**
*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 - ANALYSIS-China exports slide raises doubts about currency policy - CHINA MONEY-Faltering exports could mean flat yuan or worse in H2 - 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)