China's yuan closed stronger on Tuesday despite a weak opening caused by overnight moves in the dollar, and traders said the greenback's fortunes will continue to determine the yuan's trajectory. The dollar index rose overnight, rebounding from recent lows following the Federal Reserve's announcement of a new round of bond buying (QE3), and it inched up further in early Asian trade.
China's central bank responded by setting its daily midpoint weaker at 6.3353 per dollar on Tuesday Spot yuan also opened softer compared to Monday's close at 6.3250, but firmed slightly through the day to close at 6.3189. Traders are divided over whether global movements in the dollar or corporate dollar demand within China are the driving factor behind the yuan's recent gains.