China’s yuan firms on higher fixing and weak dollar

China’s yuan firmed against the US dollar Tuesday and was on course for its third straight month of gains, supported by a much stronger official guidance rate.

In July, the Chinese currency strengthened by up to 0.8 percent against the dollar. It was the first time the yuan has gained for three consecutive months since 2014.

Prior to market opening, the central bank in China set the yuan midpoint at 6.7148 per dollar Tuesday, the highest level in over nine months. The figure was up 135 pips, or 0.2 percent firmer than the preview fix, reflecting weakness in the greenback.

The dollar was weighed down as US political uncertainty and lukewarm economic data added to doubts about whether another Fed interest rate hike will occur this year.

On Tuesday, the Chinese yuan hit 10- month highs in both its onshore and offshore trade.

In the spot market, the onshore yuan opened at 6.7170 per dollar, changing hands at around 6.72 per dollar during the afternoon trade. The offshore yuan also surged to 6.72 per dollar.

The yuan has remained stable since the second quarter of this year and has steadily gained against the dollar, aided by Chinese authorities’ capital control efforts that appear to have flushed out most yuan bears.

Last week, the yuan was about 0.45 percent firmer against the dollar, official data from the China Foreign Exchange Trade System showed.

The global dollar index, a gauge that measures the dollar against a basket of six major currencies, edged up slightly Tuesday to 92.92 from the previous close of 92.85.