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Yuan barely changed, set to rise 0.2 pct on week

SHANGHAI, Aug 1 (Reuters) - China's yuan was flat against the dollar on Friday after the central bank set its official midpoint barely changed from the previous day and it was set to show a marginal gain on the week. The People's Bank of China (PBOC) set its midpoint at 6.1681 per dollar, just 0.01 percent lower than Thursday, the third straight trading day on which it has fixed the official rate marginally lower. Spot yuan changed hands at 6.1739 per dollar around midday, inching up 0.01 percent from Thursday's close. If it closes at this level, it will have risen 0.2 percent on the week. In July, the yuan gained 0.5 percent against the dollar, the third month of slight appreciation. It is still down 2 percent so far this year after the PBOC engineered a 3.3 percent depreciation of the currency in the first four months to deter speculative bets that the yuan would be allowed to appreciate. "A wave of dollar sales has emerged in the market recently, driving up the yuan," said a trader at an Asian bank in Shanghai. "It reflects two things: first the monetary authorities could allow the yuan to appreciate a little bit, given the latest positive economic data; second, the market has been inclined to go long on the yuan recently, buoyed by the data." In April, the yuan traded as much as 1.6 percent above the midpoint on occasions as the market looked for it to fall after the change in official policy, but recently the trend has been for the traded level to stick close to the official midpoint. The market was now watching to see if it would start trading persistently below the midpoint. "That would mean the yuan was in a favorable position to appreciate," said a trader at a Chinese city commercial bank in Shanghai. Despite the recent gains, traders said the domestic market remained wary as the strengthening of the dollar on global markets could work against further yuan appreciation. Unless the central bank clearly guided the yuan higher via the daily fixing or unless further big dollar sales emerged in the market, the yuan was unlikely to rise sharply in the near term, they said. Traders thus forecast the yuan was likely to move in a narrow range around 6.15-6.16 per dollar this month. Nomura forecast in a research report that it could appreciate to 6.07 per dollar by the year-end.

The onshore spot yuan market at a glance:

Item Current Previous Change PBOC midpoint 6.1681 6.1675 -0.01% Spot yuan 6.1739 6.1747 0.01%

Divergence from midpoint* 0.10%

Spot change ytd -1.95% Spot change since 2005 revaluation 34.05%

*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 2 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 * 6.1770 -0.04% Offshore non-deliverable 6.2530 -1.36% forwards **

*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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FACTBOX - Yuan and capital account reforms and pilot programmes

RECENT DEVELOPMENTS - China's weak currency disappoints carry traders

- Hong Kong should cherish its standing as offshore yuan hub - China c.banker - US warns China over currency depreciation - Capital flows, improving trade to prop up yuan in H2 - Dim sum bonds mark record quarter in Hong Kong

- New quotas rekindle debate over dim sum market's future

- Flood of offshore yuan bonds may spark higher yields 1/8ID: nL3N0KX1IA 3/8

KEY DATA POINTS - Yuan spot performance versus midpoint after trading band widened http://link.reuters.com/jyz38v

- China's yuan, other emerging mkt currencies vs dollar http://link.reuters.com/xyd46v

- Global currency performance INTERACTIVE GRAPHIC: http://link.reuters.com/cyx46v

- China's trade surpluses mainly driven by weak imports rather than strong exports. GRAPHIC: http://link.reuters.com/qav68s

- Despite relatively stable dollar/yuan exchange, the yuan is appreciating on a trade-weighted basis. GRAPHIC: http://link.reuters.com/sed74t

For a summary of all recent coverage and graphics on the internationalisation of the yuan, click here:

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(Reporting by Shanghai Newroom; Editing by Alan Raybould)