SHANGHAI: China's yuan inched up against the US dollar in thin trade on Tuesday, with the market shrugging off a weaker midpoint as it watched the launch of a new yuan trading system.  The People's Bank of China (PBOC) has guided the yuan lower for seven straight trading days, marking its longest weakening run since mid-November.

Prior to market opening on Tuesday, the PBOC set the official yuan midpoint at 6.6113 per dollar, its weakest since Nov. 22. Tuesday's fixing was 8 pips softer than the previous fix of 6.6105 per dollar on Monday.

In the spot market, the onshore yuan opened at 6.6150 per dollar and was changing hands at 6.6116 at midday, 50 pips firmer than the previous late session close.

The official China Foreign Exchange Trade System (CFETS), overseen by the PBOC, launched a new yuan system of matching orders for USD/CNY trades among market-makers on Monday, in an attempt to improve efficiency.

The CFETS said in an online statement late on Monday that trading volume of matching orders totalled $7.197 billion on Monday, around 33 percent of the total amount of spot trade for the day.

SHKF Research said the introduction of the new system was part of China's gradual move towards "financial market liberalisation and a free-floating currency", adding it would not alter the direction of the Chinese currency.

Traders said the new system lowered volatility in yuan trade.

Trading volume was tepid on Tuesday morning. As of midday, the volume stood at $8.31 billion.

A Shanghai-based trader at a foreign bank said the market was still assessing the yuan's direction as the dollar failed to gain strong momentum after the US Senate's approval of a tax bill over the weekend.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.01, weaker than the previous day's

95.15.

The global dollar index fell to 93.058 from the previous close of 93.188.

The offshore yuan was trading 0.01 percent weaker than the onshore spot at 6.6123 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 6.771, 2.36 percent weaker than the midpoint.

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