SHANGHAI: China’s yuan eased against the dollar on Friday but looked set for its best weekly gain in two months after sharp swings in investor sentiment during recent days.

The onshore yuan opened at 6.4638 per dollar and was changing hands at 6.4591 at midday, 25 pips weaker than the previous late session close.

If the spot yuan finishes the late night session at the midday level, it would have firmed 0.33% to the dollar - its biggest weekly gain since late May. Prior to market opening, the People’s Bank of China (PBOC) set the midpoint at 6.4602 per dollar, 340 pips or 0.53%, firmer than the previous fix of 6.4942, and was the strongest since June 30. By midday, the global dollar index rose to 91.97 from the previous close of 91.883, while the offshore yuan was trading at 6.461 per dollar. Currency traders said the yuan’s movements were tracking the performance of Chinese shares, as some investors feared huge losses in the stocks could trigger capital outflows.

China and Hong Kong stock markets had high volatility this week, as global investors dumped shares in Chinese companies after Beijing published rules banning for-profit tutoring in core school subjects and launched an anti-monopoly campaign against tech giants.

Official efforts to stem the sell-off succeeded in trimming losses. “Just as one expects regulatory risks to worsen, there was action to calm the markets,” strategists at OCBC Bank said in a note. “CNH vols came off, and the heat on the RMB was taken off as quickly as it came. Nevertheless, the dip was arrested at the 6.4500 support. Revert back to the wait-and-see, range-bound mode for the pair.”