China's yuan got stronger today after the central bank set stronger guidance for the currency's trading band and as the dollar lurked near six-week lows ahead of Federal Reserve chief Jerome Powell's testimony to the U.S. Congress.
The yuan has kept to a narrow range since surging 1% against the U.S. dollar on the first trading day of the year, and on Tuesday was trading half a percent off of late-January highs.
Before the market open, the People's Bank of China (PBOC) set the yuan's daily midpoint at 6.4516 per dollar, firmer than the previous 6.4563.
Spot yuan opened at 6.4581 per dollar and was changing hands at 6.4584 around midday, 62 pips stronger than Monday's late session close.
The offshore yuan traded almost at par with its onshore counterpart, strengthening to 6.4583 per dollar from a previous close of 6.4670.
Gains in the offshore and onshore yuan came as the global dollar index fell to 90.015 from the previous close of 90.041, near a six-week low.
Investors expect Fed chief Powell, who gives his testimony before Congress at 2030 IST, to reassure the central bank will tolerate higher inflation without immediately raising rates, which could calm bond markets and weigh on the dollar.
Offshore one-year non-deliverable forwards contracts traded at 6.631 today.
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