China's yuan rises slightly, traders see supply-demand balance
* Yuan 0.02 pct firmer at 6.0625/dlr
* Weaker dollar overnight supports yuan
* Supply and demand roughly are in balance-traders
* C.bank holds midpoint steady to prevent speculation
SHANGHAI, Feb 14 (Reuters) - China's yuan edged higher against the dollar on Friday but remained comfortably within the past week's range, with traders reporting a match between supply and demand in the market. Spot yuan traded at 6.0625 per dollar at midday, a gain of 0.02 percent from Thursday's close. The spot rate's movements closely tracked the central bank's daily midpoint. The People's Bank of China (PBOC) fixed the yuan 0.05 percent stronger on Friday at 6.1070. The PBOC has kept its daily midpoint largely stable this week, which traders interpret as a signal it wants to hold the spot rate steady to discourage speculation on yuan appreciation. Authorities are also on guard against the currency depreciation that has afflicted other emerging markets in recent weeks. Traders said Friday's slight gain was also likely a response to movements in global currency markets. "The narrow range of the yuan's rise is also in line with the dollar's weakening from yesterday," said a trader at a commercial bank in Shanghai. He said yuan and dollar demand were roughly in balance, with no big trades pulling the rate strongly in either direction.
The onshore spot yuan market at a glance:
Item Current Previous Change
PBOC midpoint 6.1070 6.1100 +0.05 Spot yuan 6.0625 6.0636 +0.02 Divergence from -0.73
Spot change ytd -0.14 Spot change since 2005 revaluation +36.52
*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
Offshore spot yuan 6.0404 +0.37* Offshore non-deliverable 6.1096 -0.04**
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. .
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KEY DATA POINTS - Yuan is positive outlier compared with plunging emerging market currencies GRAPHIC: http://link.reuters.com/cyx46v - Hot money tracker: Hot money inflows slowed to a trickle in December 2013 GRAPHIC: http://link.reuters.com/saz74t - China's trade surpluses mainly driven by weak imports rather than strong exports. GRAPHIC: http://link.reuters.com/qav68s - Corporate FX behavior reflects yuan appreciation expectations. GRAPHIC: http://link.reuters.com/tyx74t - Despite relatively stable dollar/yuan exchange rate, the yuan is appreciating on a trade-weighted basis. GRAPHIC: http://link.reuters.com/sed74t
(Reporting by Shanghai Newsroom; Editing by Richard Borsuk)