SHANGHAI: China's yuan closed almost unchanged on Tuesday as dealers said dollar supply and demand was roughly in balance. The Ministry of Commerce reported that China's foreign direct investment (FDI) inflows fell 1.35 percent in the first two months of 2013 from a year earlier, extending a run of falls triggered by a drop in investor confidence in emerging markets as global economic growth has slipped. "Trading was not affected by the FDI data, and the balance between dollar supply and demand kept the yuan rate stable," said a dealer at a European bank in Shanghai. "The market was also cautious in terms of bidding yuan up or down. Participants are looking for signs from the central bank to reveal its attitude towards the yuan's future value." Spot yuan closed at 6.2157 per dollar, nearly flat compared with Monday's close of 6.2158. The People's Bank of China (PBOC) gave the exchange rate room to weaken slightly by softening its official midpoint by 0.03 percent. Volume was healthy at $13.52 billion, up from Monday's $9.66 billion. The PBOC appears to be taking a wait-and-see approach in terms of a response to the weakening of Asian currencies, notably the Japanese yen. But if the yen and other Asian currencies fall much further, some traders predict the PBOC could force the yuan weaker by as much as two percent.

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