* Yuan closes at 6.2405/dollar, down 0.05 pct * Dollar index holds firm after rising 0.8 pct overnight * China central bank fixes midpoint 0.07 pct weaker * Seen to curb yuan fall/rise amid global uncertainties By Lu Jianxin and Pete Sweeney SHANGHAI, Feb 21 The yuan closed down slightly on Thursday, tracking a global dollar rally, but losses were limited amid signs that the People's Bank of China (PBOC) will hold the Chinese currency mostly stable due to uncertainties in global currency markets, traders said. Spot yuan closed at 6.2405 per dollar, down 0.05 percent from 6.2376 at Wednesday's close. Volume fell to $13.5 billion from Wednesday's heavy $21.04 billion, partly because the dollar strength dampened enthusiasm for firms to sell dollars, traders said. Before trading began, the PBOC set the yuan's midpoint at 6.2846, 0.07 percent weaker than Wednesday's midpoint of 6.2804, as the PBOC responded to a 0.8 percent rally in the dollar index overnight. Caution has increased since the weekend, when a statement by G20 policymakers did not single out Tokyo for its polices that have depressed the yen. The market largely interpreted the G20 statement as de facto acceptance of Japan's recent expansionary monetary policies. "The PBOC typically tries to control the pace of yuan appreciation and depreciation during global financial and economic uncertainties," said a trader at a major Chinese commercial bank in Shanghai. "Recent midpoints have again shown signs of such moves by the PBOC, and that understanding has helped kept the yuan relatively stable these days." The onshore spot yuan market at a glance: Item Current Previous Change PBOC midpoint 6.2846 6.2804 0.07 Spot yuan 6.2405 6.2376 0.05 Divergence from -0.70 midpoint* Spot change YTD -0.16 Spot change since 2005 revaluation +32.63 *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The 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 traded in Hong Kong (CNH) remains at a premium to the onshore version but the premium has recently narrowly sharply due to the global dollar strength. One-year non-deliverable forwards, considered an imperfect indicator of future expectations for yuan appreciation or depreciation, were quoted at rates implying depreciation over the next 12 months. The offshore yuan market at a glance: Instrument Current Difference from onshore (pct) Offshore spot yuan 6.2400 +0.01* Offshore non-deliverable 6.3250 -0.63** forwards *Premium for offshore spot over onshore **Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. . >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> MARKET DRIVERS - U.S. dollar holds gains as Fed minutes fuel withdrawal symptoms. - G20 promises unlikely to end devaluation debate - China restrains yuan rise in response to Asian currency weakness - Spot yuan has rallied strongly since late July 2012, and the PBOC is using its daily midpoint to restrain further appreciation. GRAPHIC: link.reuters.com/pyx74t - China's trade surplus surged in late 2012, but the surge was mainly due to weak imports rather than strong exports. GRAPHIC: link.reuters.com/qav68s - Corporate yuan purchases still exceed dollar purchases, but the gap is narrowing. Exporters are converting progressively smaller portions of their foreign exchange receipts into yuan. GRAPHIC: link.reuters.com/syx74t - Hot money outflows may be putting downward pressure on the yuan. GRAPHIC: link.reuters.com/saz74t - Despite relatively stable dollar/yuan exchange rate, the yuan is appreciating on a trade-weighted basis. GRAPHIC: link.reuters.com/sed74t >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> (Editing by Richard Borsuk)
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