SHANGHAI: China's yuan ended up slightly on Friday, helped by strength in the euro after the European Central Bank chief vowed to hold the euro zone together, but uncertainty over Europe's debt woes and global growth is expected to keep the yuan under pressure. Market players are also concerned that month-end dollar demand from large oil companies could also drag on China's currency. "The recent yuan rebounds over the past several days are not very strong, which indicates the market is still concerned that the yuan will fall further," said a dealer at a Chinese commercial bank in Shanghai. Spot yuan, which has closely tracked the euro in recent months, ended at 6.3807 per dollar, 57 pips firmer than Thursday's close. The People's Bank of China set the daily midpoint at 6.3325, 56 pips stronger than Thursday's fix. But dealers also said the central bank would not allow a sharp fall in the yuan, adding that 6.40 would be a strong support level in the near term. If spot yuan breaks through 6.40, the central bank will be forced to intervene, they added. Longer term, however, the picture could be different. Liu Dongliang, a currency strategist at China Merchants Bank in Shenzhen, said in a report that the yuan could depreciate to as weak as 6.45 or 6.50 in the second half of this year, given the economic environment both at home and abroad. The one-year non-deliverable forward fell slightly to 6.43330 late on Friday from Thursday's 6.4365. Offshore yuan traded in Hong Kong remained close to the onshore price at 6.3842. In Asian trade, the euro steadied after a rally on European Central Bank chief Mario Draghi's vow while the US dollar index was little changed at 82.888 after slumping 0.9 per cent overnight.

Source