SHANGHAI: China's yuan firmed against the US dollar on Tuesday and looked set to strengthen for the seventh straight session, thanks to broad weakness in the greenback.

The People's Bank of China (PBOC) set the midpoint rate at 6.7611 per dollar prior to the market opening, slightly weaker than the previous fix of 6.7562.

In the spot market, the yuan opened at 6.7685 per dollar and was changing hands at 6.7614 at midday, 104 pips firmer than the previous late session close but 3 pips weaker than the midpoint.

The yuan gained support from a slide in the dollar on Tuesday, traders said.

The global dollar index, a gauge that measures the strength of the greenback against six other major currencies, sank to a 10-month low of 94.778, hobbled by uncertainty over the pace of the US Federal Reserve's policy tightening and worries that President Donald Trump will fail to deliver healthcare reforms.

Onshore traders said the dollar index would continue to guide movements of the yuan in the near term.

Some market participants said the yuan would remain range-bound. One trader at a foreign bank in Shanghai expected the yuan to trade between a range of 6.75 to 6.8 per dollar in the short term.

Some companies were taking advantage of a cheaper dollar by stocking up the US currency on Tuesday, while some banks received increasing queries from their clients on liquidating their dollar positions to reduce exchange lossesk, traders said.

Huang Yiping, a member of the PBOC's monetary policy committee, told the central bank-owned Financial News on Tuesday that China will look to give its currency greater flexibility, expand its free floating range and reduce intervention in the foreign exchange markets.

Net foreign exchange sales by China's central bank rose for the first time in seven months in June, official data showed on Monday, though they remained small compared with the end of last year as capital outflows from China have slowed.

The central bank sold a net 34.3 billion yuan worth of foreign exchange in June, up from 29.3 billion yuan in May, according to Reuters calculations based on official data.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.17, weaker than the previous day's 94.22.

The offshore yuan was trading 0.09 percent firmer than the onshore spot at 6.7555 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 6.891, 1.89 percent weaker than the midpoint.

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