SHANGHAI: China's yuan fell against the dollar on Tuesday after the central bank fixed its midpoint at a one-month low, following a recovery in the greenback in offshore trade, while a relaxation in outflow controls is expected to weigh on offshore spot.

The People's Bank of China set its official midpoint at 6.9037 per dollar prior to the market open on Tuesday, its weakest level since April 10.

The US dollar regained lost ground against most currencies following its selloff earlier this week, which was triggered by a euro relief rally after the election of Emmanuel Macron, a pro-euro centrist, in the French presidential election.

Tuesday's fixing was 90 pips, or 0.13 percent, softer than the previous fix, which was at 6.8947.

In the spot market, the yuan opened at 6.9179 per dollar and was changing hands at 6.9063 at midday, 13 pips weaker than the previous late session close and 0.04 percent softer than the midpoint.

Traders said the market was very stable in morning trade.

"Willingness to purchase dollars by companies was not strong, so the spot rate didn't swing a lot," said a trader at a foreign bank in Shanghai.

The trader expected the market to continue with a range trading strategy.

However, the offshore yuan might fall to test a low of 6.93 per dollar on resurfacing capital outflow pressure after recent loosening of capital outflow controls and lingering deleveraging, said Ken Cheung, Asia FX strategist at Mizuho Bank in Hong Kong.

China's central bank relaxed its management of cross-border capital flows put in place just months ago to shore up the yuan, and is no longer demanding that banks match outflows with equal inflows, banking sources told Reuters in April.

As of midday, the offshore yuan was trading 0.05 percent weaker than the onshore spot at 6.9095 per dollar.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.96, firmer than the previous day's 93.85.

The global dollar index rose to 99.111 from the previous close of 99.06.

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 7.1153, 2.97 percent weaker than the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.