[HONG KONG] China's yuan closed flat against the dollar on Tuesday after the central bank set a slightly stronger midpoint as the market awaited clues of future yuan movements.
The People's Bank of China set the midpoint at 6.3966 per dollar prior to market open, weaker than the previous day's closing quote of 6.3947.
The spot market closed at 6.3938, or 9 pips away from the previous close and 0.04 per cent away from the midpoint.
The spot rate is currently allowed to trade with a range 2 per cent above or below the official fixing on any given day.
The offshore yuan was trading 0.82 per cent weaker than the onshore spot at 6.4467 per dollar.
The yuan posted its biggest weekly loss on record and touched four-year lows after the central bank's surprise devaluation of its currency by nearly 2 per cent last Tuesday.
Traders expect the currency to fall further amid a sluggish economy in China though a significant devaluation or a series of devaluations to boost exports is unlikely.
Morgan Stanley revised down its USD/CNY forecast to 6.60 at end-2015 and 6.91 at end-2016, compared with the previous forecast of 6.09 for 2015 and 6.07 for 2016.