China's yuan edged higher against the dollar, which was dragged down by corporate sales in Tuesday's morning session with the local currency on track for its best monthly performance in over two decades. The dollar's losses, however, were marginal. It traded above a recent three-year low against a basket of major currencies, supported by rising US bond yields as traders awaited a Federal Reserve policy meeting for fresh catalysts.
The recent rally in the yuan has pushed its year-to-date gain against the dollar to 2.7 percent, adding to its increase of around 6.8 percent in 2017 on the back of solid economic growth. According to Thomson Reuters data, the Chinese unit is on course for its biggest monthly gain since 1994, when market rates were unified.
Prior to market opening on Tuesday, the People's Bank of China lowered its official yuan midpoint for the first time in over a week to 6.3312 per dollar, 45 pips or 0.07 percent weaker than the previous fix at 6.3267.
In the spot market, the onshore yuan opened at 6.3356 per dollar and was changing hands at 6.3344 at midday, 116 pips firmer than the previous late session close. The spot yuan trade was sluggish, with trading volume at $4.366 billion as of midday. That was well below the normal half-day volume of around $15 billion.
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