Yuan strengthens on dollar sales, set for winning month

China’s yuan strengthened against the US dollar, supported by rising corporate dollar sales and a firmer official fixing.

The Chinese currency is on course for its best day in three weeks, while it also looks set for a winning month.

Prior to market opening on Tuesday, the People’s Bank of China, the country’s central bank, lifted its official yuan midpoint to 6.6397 per dollar, 90 pips or 0.14 percent firmer than the previous fix of 6.6487 on Monday.

The stronger midpoint reflected losses in the dollar as investors turned cautious after US President Donald Trump’s former campaign manager was charged with money laundering in the federal probe into Russian meddling in the 2016 presidential election.

In the spot market, the onshore yuan opened at 6.6388 per dollar and was changing hands at 6.6274, 186 pips firmer than the previous late session close and 0.19 percent stronger than the midpoint.

If the spot yuan closes the late night session at that level, it would have gained around 0.4 percent against the greenback for the month.

The yuan lost about 1 percent of its value against the greenback in September, the biggest monthly loss since November 2016.

Multiple traders said major Chinese State-owned banks were selling dollars to fulfill client orders.

“That was corporate dollar selling, which were financial operations at the end of the month,” said a trader at a Chinese bank in Shanghai.

Market participants said onshore yuan trade was not affected by recent volatility in the country’s bond market. The global dollar index rose to 94.575 from the previous close of 94.56.