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China yuan down late on dollar gains offshore, greek woes

China yuan down late on dollar gains offshore, greek woes Source:
Date: 16-05-2012
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SHANGHAI (Dow Jones)--China's yuan fell against the U.S. dollar late Wednesday, guided by a daily reference rate that reflected the dollar's gains offshore amid global risk aversion.

As the euro was weighed by worries over Greece's political turmoil and whether it would be forced out of the currency bloc, investors flocked to the safe-haven U.S. unit.

On the over-the-counter market, the dollar was at CNY6.3222 around 0830 GMT, higher than Tuesday's close of CNY6.3182. It traded in a range of CNY6.3198 to CNY6.3280.

The People's Bank of China set the dollar/yuan central parity rate at 6.3205, up from Tuesday's 6.3110 following the greenback's strength overseas. The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 81.253 late Tuesday in New York, higher than 80.708 late Monday. At 0830 GMT, the index was at 81.258.

The yuan has fallen 0.5% since the start of 2012.

"The dollar has risen quite a bit due to the ongoing political uncertainty in Europe. Of course, China's slowing growth is also contributing to rising dollar demand," said a trader at a Shanghai-based Asian bank.

Offshore, one-year dollar/yuan nondeliverable forward contracts rose to 6.3900/6.3930 from 6.3735/6.3765 late Tuesday, implying a 1.1% fall by the yuan over the next year.

In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar was at CNY6.3250 late Wednesday, higher than CNY6.3190 late Tuesday.
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