China's yuan steady vs dollar in benchmark NDFs

* Dlr/yuan NDFs now focus on China's stable yuan policy

* They are less affected by global dollar fall

* Trend seen persisting for at least another two months

SHANGHAI, Sept 22 - The yuan was little changed against the dollar on Tuesday in its value implied by benchmark one-year dollar/yuan non-deliverable forwards (NDFs) <CNY1YNDFOR=> as the offshore market increasingly focuses on China's stable yuan policy.

The (NDFs) quoted the yuan at 6.7336 bid in late trade, inching down from Monday's close of 6.7345.

Twelve-month yuan appreciation implied by the key NDFs, which move inversely with the forwards, rose marginally to 1.42 percent measured from the Chinese central bank's daily mid-point from 1.39 percent implied on Monday.

The implied yuan appreciation had initially edged lower in intraday trading on Tuesday but it was nudged slightly higher late in the session by a steep 0.8 percent fall of the U.S. dollar against a basket of six major world currencies dominated by the euro <EUR=> <.DXY> in early European trade.

"As the Chinese central bank has shown determination that it will not allow the yuan to move much in the short term, NDFs are now moving increasingly in line with the central bank's mid-point instead of the dollar's movements in global markets," said a senior dealer at a major European bank in Shanghai.

The dealer and several others said the trend might persist for at least another two months before the Chinese government holds its annual economic meeting late in the year, which may send out signals about adjustments of yuan policy.

In another sign of stable yuan policy for now, the People's Bank of China (PBOC) set the yuan's daily mid-point slightly lower at 6.8289 on Tuesday from Monday's 6.8280.

Onshore spot yuan <CNY=CFXS> closed a touch higher at 6.8269, buoyed by the dollar's fall in Europe, after it had initially traded as low as 6.8290, almost unchanged from Monday's close of 6.8289 under the guidance of the central bank's mid-point.

The central bank has used the mid-point, or its reference rate, by which spot yuan can move only 0.5 percent in either direction in a day, to keep the Chinese currency in a virtual, around 100-pip peg to the dollar since July last year.

The move reflects caution not to allow speculation in the yuan's exchange rate to add uncertainties to China's economy, which has slowed down sharply because of the global financial crisis, despite strong signs of improvement in recent months.

"The central bank has sent clear and strong signals that it will stick to a stable yuan policy in the near term, and traders in both onshore and offshore markets now well understand that," said a dealer at a U.S. bank in Shanghai.

Benchmark offshore one-year dollar/yuan offshore volatilities <CNY1YO=>, which reflect hedging demand for exchange rate risks, were also little changed at 4.50 percent bid late in the session, compared with Monday's close of 4.55 percent.

While China is maintaining the yuan's stability, the dollar has tumbled globally, with the U.S. currency's index <.DXY> last week hitting a one-year low of 76 and plunging 15 percent from its recent high of 89 hit in March.

But instead of being boosted by the dollar's slide, the NDF's implied yuan appreciation in 12 months has now dropped sharply to only slightly higher than 1 percent from a multi-month high around 2.5 percent in early June.