SHANGHAI: China’s yuan inched lower against the dollar and continued hovering near a key threshold on Monday as a much strengthened official guidance stabilized the impact from widening yield differentials between the world’s two largest economies.

Yields on China’s long-dated government bonds, including 10-year and ultra-long 30-year and 50-year, all hit their lowest levels on record at one point in morning deals, widening yield disadvantage against the United States, which pressured the yuan, traders and analysts said.

The yield gap between China and the United States widened to its largest in 22 years last week. And the divergent yield moves prompted money to chase dollar-donominated assets for higher returns. As of 0230 GMT, the onshore yuan was 0.02% lower at 7.2955 to the dollar, and not far from the psychologically important 7.3 per dollar and a 13-month low of 7.2999 hit last week.