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Yuan eases as ECB meeting awaited

    SHANGHAI, Sept 10 (Reuters) - China's yuan slipped on
Thursday, as market participants awaited a European Central Bank
meeting to gauge policymakers' views on the common currency's
recent appreciation.
    Traders said the yuan could again test the 6.81 to the
dollar level if the euro remains strong.  
    While markets expect the ECB to keep policy steady,
investors will closely watch President Christine Lagarde's
comments on how the euro's rise to a two-year high this month
affects the outlook for inflation and economic growth.
    Spot yuan opened at 6.8330 per dollar and was
changing hands at 6.8381 at midday, 61 pips weaker than the
previous late session close.
    The People's Bank of China set the midpoint rate
at 6.8331 per dollar prior to the market open, firmer than the
previous fix of 6.8423 and the strongest since Sept. 3. 
    Traders also noted the impact from the U.S. stock market
moves and developments in the Sino-U.S. relations. 
    "For the short-term, there is a big impact from the U.S.
equities. The yuan appreciation could lose momentum if the U.S.
stocks extend declines," said a trader at a Chinese bank. 
    Investors could seek shelter in the safe-haven greenback in
case of a sharper correction on the Wall Street, pushing the
dollar index higher and putting pressure on renminbi. 
    The United States has revoked visas for more than 1,000
Chinese nationals under a May 29 presidential proclamation to
suspend entry from China of students and researchers deemed
security risks, a State Department spokeswoman said on
Wednesday.
    The Thomson Reuters/HKEX Global CNH index, which
tracks the offshore yuan against a basket of currencies on a
daily basis, stood at 93.37, weaker than the previous day's
93.43. 
    The global dollar index fell to 93.154 from the
previous close of 93.259. 
    The offshore yuan was trading at 6.8395 per dollar
at midday. 
    Offshore one-year non-deliverable forwards contracts
(NDFs), considered the best available proxy for
forward-looking market expectations of the yuan's value, traded
at 6.9863.
    One-year NDFs are settled against the midpoint, not the spot
rate.


    The yuan market at 4:05AM GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.8331   6.8423    0.13%
                                       
 Spot yuan          6.8385   6.832     -0.10%
                                       
 Divergence from    0.08%              
 midpoint*                             
 Spot change YTD                       1.82%
 Spot change since 2005                21.03%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         93.37       93.43     -0.1
 Reuters/HKEX                          
 CNH index                             
 Dollar index    93.154      93.259    -0.1
 
    
    
*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% from official midpoint rate it sets each
morning.

    OFFSHORE CNH MARKET   
  
 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.8395    -0.01%
        *                        
 Offshore              6.9863    -2.19%
 non-deliverable                 
 forwards                        
               **                
 
*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 Luoyan Liu, Jindong Zhang and Andrew Galbraith;
Editing by Kim Coghill)
  
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