China's yuan rose to the highest level in nearly three weeks against the US dollar on Tuesday, led by the central bank's stronger fix as authorities took the opportunity of a weaker greenback to consolidate efforts to support its battered currency. Based on the morning trade, the yuan was poised for its biggest daily gain in four months.
The People's Bank of China set the midpoint rate at 6.8575 per dollar prior to market open, 0.43 percent firmer than the previous fix at 6.887. The spot market opened at 6.8640 per dollar and was changing hands at 6.8684 at midday, -146 pips away from the previous late session close and 0.16 percent away from the midpoint. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.55, weaker than the previous day's 95.91.
The offshore yuan was trading -0.10 percent away from the onshore spot at 6.8754 per dollar. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 7.089, -3.27 percent away from the midpoint. One-year NDFs are settled against the midpoint, not the spot rate.
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