SHANGHAI, March 29 (Reuters) - China's yuan slightly
weakened against the dollar on Friday as it neared the end of a
volatile week in which the Chinese central bank attempted to
slow the pace of the currency's fall against a buoyant dollar.
    Traders awaiting fresh U.S. inflation data later in the day
expect further downward pressure on the yuan, as well as rising
volatility.
    The onshore spot yuan was changing hands at
around 7.2270 per dollar at midday, slightly weaker than the
previous late session close.
    Reflecting central bank efforts to stabilise the currency,
the People's Bank of China set the midpoint rate
almost flat before market open. At 7.095 per dollar, the fixing
is more than 1,300 pips stronger than Reuters estimates.
    Guosheng Securities attributed the yuan's recent weakness
mainly to dollar's strength. The dollar index has
rebounded sharply since mid-March and is up 3.2% so far this
year.
    "In the short term, the yuan still faces downward pressure"
as the central government "follows the trend", Guosheng analysts
Xiong Yuan and Liu Xinyu said in a note. 
    Yuan depreciation will negatively impact China's stock, bond
and commodities markets, the brokerage said. 
    But the analysts think a big drop in the yuan is unlikely
given limited room for dollar strength, and the fact that
"China's central bank will continue to exert certain control in
the forex market." 
    Signifying authorities' hand, the onshore yuan trades more
than 300 pips stronger than the offshore yuan, whose
value is decided more by market forces.
    Traders are waiting for the release of the personal
consumption expenditures price index in the U.S. later on
Friday.
    The Federal Reserve's preferred gauge of inflation may have
picked up pace in February, according to economists polled by
Reuters, potentially giving another boost to the dollar.     


    The yuan market at 4:05AM GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint                         
                                        0.00%
                    7.095    7.0948    
                                       
                                       
 Spot yuan                             
                                        -0.02%
                    7.2269   7.2256    
                                       
                                       
 Divergence from                       
 midpoint*                             
                    1.86%              
 Spot change YTD                       
                                        -1.79%
 Spot change since 2005                
 revaluation                            14.52%
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson                               
 Reuters/HKEX                           0.0
 CNH index                             
                                       
 Dollar index                          
                  104.615               0.1
                             104.546   
                                       
                                       
 
    
    
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People's Bank of China (PBOC) allows the exchange rate to
rise or fall 2% from official midpoint rate it sets each
morning.

    OFFSHORE CNH MARKET   
  
 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan              
        *                        -0.43%
                       7.2578    
                                 
                                 
 Offshore                        
 non-deliverable          7.04   0.78%
 forwards                        
               **                
 
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
. 
    

 (Reporting by Shanghai newsroom; Editing by Jamie Freed)