China's yuan strengthened against the US dollar in both onshore and offshore markets on Tuesday morning, relative to the day's guidance and Monday's local official close, aided by the greenback's broad weakness. The midday level, while more than 200 pips stronger than the 4:30 pm Monday official close of trading, was slightly weaker than the late night close.
The onshore yuan has gained 1.8 percent against the dollar in August, and is on course for its best month since July 2005 when the yuan was revalued and taken off a fixed dollar peg. Some market watchers said much of the yuan's gain since the start of the second quarter is due to the weaker dollar and to Beijing's tighter capital controls, rather than economic fundamentals.
Prior to market opening on Tuesday, the People's Bank of China set its midpoint rate at 6.6293 per dollar, again the strongest since August 19, 2016. The level was 60 pips or 0.1 percent firmer than the previous fix. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.06, firmer than the previous day's 94.78. The global dollar index rose to 92.234 from the previous close of 92.207.