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Yuan slips on weaker PBOC guidance, firm trade data stems losses

    * Adds traders and analysts' comments, updates prices

    SHANGHAI, Oct 13 (Reuters) - China's yuan extended its
recent decline on Tuesday, led lower by weaker central bank
guidance, although upbeat trade data helped contain the losses.
    Prior to the market open, the People's Bank of China set the
midpoint rate at 6.7296 per dollar, weaker than the
previous fix of 6.7126 and market projections.
    The spot market opened at 6.7580 per dollar and
was changing hands at 6.7533 at midday, 73 pips weaker than the
previous late session close.
    The yuan retreated from a 17-month high on Monday after the
central bank cut foreign exchange forward reserve requirements,
with the offshore yuan posting its steepest daily drop since
March.
    Traders said the market on Tuesday continued to digest the
central bank's policy change over the weekend.
    "A sharp depreciation is not the policy intention of the
authorities who just do not want too much one-way appreciation
in the yuan," said a Shanghai-based trader at a foreign bank.
"The yuan could next trade at a range of 6.7-6.8 per dollar."
    Analysts said the central bank's latest measures didn't
really change the long-term outlook for the yuan.
    "It was a little reminder to investors that it's not a
one-way bet. I wouldn't think that changes the fundamental
investment proposition in China in a significant way," said Tai
Hui, Asia chief market strategist at J.P. Morgan Asset
Management. 
    "Between now and the elections, the market may stay cautious
and the dollar may stabilise and rebound a little bit. That, by
default, is going to push the yuan a little weaker," he said.  
    Losses in the Chinese currency narrowed after the country
posted strong trade data. 
    China's imports grew at their fastest pace this year in
September, while exports extended their strong gains as more
trading partners lifted coronavirus restrictions in a further
boost to the world's second-biggest economy. 
    The Thomson Reuters/HKEX Global CNH index, which
tracks the offshore yuan against a basket of currencies on a
daily basis, stood at 94.23, weaker than the previous day's
94.68.
    The global dollar index rose to 93.186 from the
previous close of 93.041.
    The offshore yuan slipped to a low of 6.7650 per
dollar before trading at 6.7513 by 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 6.9221, 2.78% away from the midpoint.
    One-year NDFs are settled against the midpoint, not the spot
rate.
    
    The yuan market at 4:03AM GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.7296   6.7126    -0.25%
                                       
 Spot yuan          6.7533   6.746     -0.11%
                                       
 Divergence from    0.35%              
 midpoint*                             
 Spot change YTD                       3.11%
 Spot change since 2005                22.55%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         94.23       94.68     -0.5
 Reuters/HKEX                          
 CNH index                             
 Dollar index    93.186      93.041    0.2
 
    
    
*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    6.7533    0.00%
        *                        
 Offshore              6.9221    -2.78%
 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 Tom Westbrook;
Editing by Sam Holmes)
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