SHANGHAI: China’s yuan hovered near a 13-month low against the US dollar on Tuesday, pressured by bond yields near record-lows amid a slow economic recovery at home and higher-for-longer US rates dominating investors’ minds.

The yield gap between 10-year Chinese and US bonds widened to the largest since November 2000, prompting investors to plow money into dollar-donominated assets for higher returns.

Yields on China’s long-dated government bonds, including 10-year and 30-year, hovered near record lows at 1.69% and 1.95%, respectively, as investors head for 2025 betting there will be no sharp recovery in the economy. The spot yuan opened at 7.2950 per dollar and was last trading 14 pips lower than the previous late session close at 7.2984 as of 0230 GMT, close to levels last seen in November, 2023.

The onshore yuan has been trading just below the key 7.3 level in recent sessions.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1876 per dollar, 1,155 pips firmer than a Reuters’ estimate.