But for the whole of 2009, the NEER dropped 5.4 percent. While the Chinese central bank kept the yuan's value little changed versus the dollar, the US dollar index rose 4.11 percent in December, meaning the yuan appreciated against major global currencies in line with the rise in the US currency.
As the dollar is estimated to have weighting of around 70 percent of China's trade-weighted basket of currencies, the dollar's global rise in December helped to push the yuan higher versus the basket. Over the past year, the People's Bank of China has maintained the yuan at a virtual peg to the dollar, keeping the Chinese currency in a narrow range as the global crisis hurt the key export sector and caused a fall-off in foreign direct investment.
"The slight rise in NEER because of the strong dollar in December cannot indicate anything," said a dealer at a Chinese bank in Shenzhen, adding that the stable yuan policy will not change in the near term. Indeed, spot yuan was flat against the dollar as the central bank set the yuan's mid-point only one-pip lower, showing a consistent intention to keep the yuan stable for now.
The People's Bank of China set the yuan's daily mid-point against the dollar at 6.8272 on Monday, barely changed from Friday's 6.8271. Spot yuan closed at 6.8270 against the dollar, little changed from the previous close of 6.8269 and in line with the central bank's mid-point.