* Yuan finishes at 6.2376/dollar, up 0.11 pct
* Oil firms buy dollars for overseas business-traders
* But market increasingly wary of Asian currency war risk
* China central bank fixes midpoint 0.3 pct stronger
* No impact from weak China January FDI data
By Lu Jianxin
SHANGHAI, Feb 20 (Reuters) - The yuan closed up on Wednesday
after the People's Bank of China (PBOC) set its daily midpoint
slightly higher to reflect a fall in the dollar in global
markets, and as oil companies bought dollars for their overseas
business, traders said.
Still, the market is increasingly wary of the growing risk
of Asian countries devaluing their currencies to protect
exports, but ignored a decline in China's foreign direct
investment (FDI) inflows, traders said.
Spot yuan closed at 6.2376 per dollar, up 0.11
percent from 6.2443 at Tuesday's close. Volume was heavy at
$21.04 billion, up sharply from Tuesday's $14.38 billion, partly
pushed up by demand from oil firms, traders said.
Chinese oil giants, such as PetroChina
and Sinopec , are the biggest dollar buyers
on the Chinese domestic foreign exchange market for their active
overseas acquisitions and because China imports more than half
of its crude oil requirements.
Before trading began, the PBOC set the yuan's midpoint at
6.2804, 0.3 percent stronger than Tuesday's midpoint of 6.2821
and inversely tracking the dollar index, which fell
slightly overnight.
In the latest sign of worries that Asian countries may push
down the value of their currencies following a sharp decline in
the Japanese yen, the New Zealand central bank said on Wednesday
that the New Zealand dollar was significantly overvalued
compared with its economic fundamentals.
Reserve Bank of New Zealand Governor Graeme Wheeler said
part of the currency's strength reflected global imbalances,
knocking the currency down by nearly half a cent.
Caution has increased since the weekend, when a statement
by G20 policymakers did not single out Tokyo for its actions
which have depressed the yen.
The market largely interpreted the statement as de facto
acceptance of Japan's recent expansionary monetary policies.
In another related development, China's FDI inflows in
January fell 7.3 percent from a year earlier, extending 2012's
series of consecutive year-on-year declines that highlights
still sluggish global economic conditions.
The Commerce Ministry said on Wednesday that China drew
$9.27 billion in FDI in January, down from December's $11.7
billion. Investment inflows from key Asian economies and the
U.S. were down in the latest period.
The onshore spot yuan market at a glance:
Item Current Previous Change
PBOC midpoint 6.2804 6.2821 0.03
Spot yuan 6.2376 6.2443 0.11
Divergence from -0.68
midpoint*
Spot change ytd -0.12
Spot change since 2005 revaluation +32.69
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The PBOC allows the exchange rate to rise or fall 1 percent from
official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
The offshore yuan traded in Hong Kong (CNH) remains
at a premium to the onshore version. Analysts say this is partly
due to the fact that the offshore yuan is not bound by the
official midpoint, which keeps the exchange rate within 1
percent on either side of the fix.
One-year non-deliverable forwards, considered an imperfect
indicator of future expectations for yuan appreciation or
depreciation, were quoted at rates implying depreciation over
the next 12 months.
The offshore yuan market at a glance:
Instrument Current Difference from
onshore (pct)
Offshore spot yuan 6.2345 +0.05*
Offshore non-deliverable 6.3170 -0.58**
forwards
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
.
