US job data released last Friday suggested that the Federal Reserve might not quicken its pace for more interest rate hikes this year, as was feared after the last inflation readings. The change in view has once again led to a softer dollar against other currencies.

Prior to the market opening, the People's Bank of China set the midpoint rate at 6.3218 per dollar prior to market open, 115 pips or 0.18 percent firmer than the previous fix of 6.3333 on Monday.

In the spot market, the onshore yuan opened at 6.3220 per dollar and was changing hands at 6.3249 at midday, 31 pips firmer than the previous late session close but 0.05 percent softer than the midpoint.

Market watchers continued to attribute the yuan's recent relatively stability to the annual meeting of parliament in Beijing, which started on March 5 and is scheduled to wrap up on March 20.

Traditionally, Chinese authorities have sought to keep markets stable during major political events.

News that Beijing will merge its banking and insurance regulators in an attempt to better identify and control financial risks had no immediate impact on the yuan, traders said.

The long-awaited move to streamline and tighten oversight of the $42 trillion banking and insurance sectors comes as authorities seek more clout to crack down on riskier lending practices and reduce high corporate debt levels.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 96.94, weaker than the previous day's 96.98.

The global dollar index rose to 89.972 from the previous close of 89.895.

The offshore yuan was trading 0.01 percent firmer than the onshore spot at 6.3245 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 6.4555, 2.07 percent weaker than the midpoint.

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