SHANGHAI, March 17 (Reuters) - China's yuan was little changed against the dollar on Tuesday after the central bank fixing helped the currency claw back losses from a major global selloff in risk assets driven by the worsening of the coronavirus pandemic. Traders said while broad risk-off sentiment continued to drive investors to the dollar, the People's Bank of China's counter-cyclical factor lent some support for the local unit. Prior to market opening on Tuesday, the PBOC set the midpoint rate at 7.0094 per dollar, 76 pips or 0.1% weaker than the previous fix of 7.0018, and was the weakest since Feb. 27. Analysts and traders said Tuesday's official guidance rate was not as weak as their forecasts, discouraging investors to test lows in the yuan. Tuesday's fixing was 47 pips firmer than Reuters' estimate of 7.0141. In the spot market, onshore yuan opened at 6.9930 per dollar and was changing hands at 6.9942 at midday, only 10 pips firmer than the previous late session close. Several currency traders said the market was yet to figure out a clear direction for now, and that they would continue to monitor global market conditions and disruptions to the economy from a coronavirus outbreak. China on Tuesday reported another rise in confirmed coronavirus cases as infections from abroad made it increasingly hard for authorities to reduce the overall number of new infections to zero. However, some market gauges started to show yuan's depreciation pressure might have picked up. One-month risk reversals for the dollar against the yuan offshore, a gauge that measures the premium paid for calls over puts, have shown an upward trend to the highest level in more than seven months on Tuesday. That indicates that bullish call options remained more expensive than bearish put options, underscoring how the market is positioning for further yuan depreciation. Economists and traders said the yuan's bearish outlook might be a result of the economic fallout from the coronavirus outbreak after sluggish data. China' industrial output contracted at the sharpest pace in 30 years in the first two months of the year, official data showed on Monday. "Now that Covid-19 has become a global pandemic and China is seeing more imported infections, external turbulence is likely to compound domestic downside risks," economists at BNP Paribas said in a note. "On the one hand, China will probably have to prolong containment measures; on the other, the decline in external orders looks set to weigh on its exports and business sentiment." Economists at Standard Chartered Bank downgraded their full-year GDP growth forecast to 4.0% from 5.5% to account for "the deeper-than-expected Q1 downturn and a heightened risk of a global recession as the coronavirus becomes a pandemic." The global dollar index traded at 98.048 at midday, when the offshore yuan was trading at 7.0012 per dollar.
The yuan market at 0409 GMT:
ONSHORE SPOT:Item Current Previous ChangePBOC midpoint 7.0094 7.0018 -0.11%Spot yuan 6.9942 6.9952 0.01%Divergence from -0.22%
midpoint*Spot change YTD -0.44%Spot change since 2005 18.33%
Key indexes:Item Current Previous ChangeThomson 94.49 94.04 0.5
Reuters/HKEX CNH indexDollar index 98.048 98.069 0.0
*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 MARKETInstrument Current Difference
from onshoreOffshore spot yuan 7.0012 -0.10%*Offshore 7.0895 -1.13%
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. .
(Reporting by Winni Zhou and Andrew Galbraith; Editing by Sam Holmes)