BEIJING: China's yuan hovered at a near four-year high against the dollar on Thursday, underpinned by rising demand for less risky assets as Russian forces began attacking Ukraine.

The Ukraine government said Moscow had launched a full-scale invasion, with Russian troops landing in the Black Sea port of Odessa and in Mariupol, and as Ukrainian military command centres in several cities came under missile attacks.

Safe haven demand surged to benefit the dollar, while the Chinese currency also attracted higher attention from overseas investors, after Russian President Vladimir Putin authorised a military operation in eastern Ukraine on Thursday.

China's yuan weakens as Ukraine escalation rattles sentiment

In contrast to most emerging market currencies, which depreciated against a soaring dollar, traders and analysts said the yuan appeared to be more resilient, thanks to rising foreign capital inflows into Chinese assets and heavier corporate conversion of their export receipts into the yuan.

"There has been continued heavy demand (for the yuan), and markets are discussing if the yuan has become the latest safe haven currency," said a trader at a Chinese bank.

Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.328 per dollar, 33 pips firmer than the previous fix 6.3313.

In the spot market, the onshore yuan opened at 6.3210 per dollar and jumped to a high of 6.31 at one point, the strongest level since April 2018. By midday, it was changing hands at 6.3166, 24 pips softer than the previous late session close.

Traders said absence of apparent discomfort from the PBOC amid recent yuan gains encouraged market participants to test new highs in the yuan.

The yuan has gained about 0.7% against a rising dollar so far this month.

By midday, the global dollar index, which gauges the greenback against six major peers, rose to 96.577 from the previous close of 96.19, while the offshore yuan was trading at 6.3132 per dollar.