SHANGHAI, Sept 9 (Reuters) - China's yuan touched its softest level against the dollar in more than a week on Wednesday on a jump in risk aversion spurred by a fall in technology shares on Wall Street and worries over Sino-U.S. relations ahead of the U.S. presidential election. The rout in tech firms, partly triggered by concerns over excess purchases of call options, spooked global investors and prompted a sharp rally in the dollar index, pushing the greenback to one-month highs against a basket of rivals. Against the backdrop of a stronger dollar, the People's Bank of China set the midpoint of the yuan's daily trading band at 6.8423 per dollar on Wednesday, weaker than the previous fix of 6.8364. Spot yuan opened at 6.8494 per dollar and weakened to 6.8565, its softest level since Aug. 31, before regaining ground to 6.8486 by midday. That was 16 pips weaker than the previous late session close. The offshore yuan briefly weakened past the 6.86 per dollar level, and was trading at 6.8539 per dollar at midday. "Overnight U.S. stocks plunged and the dollar index gained, leading the yuan lower," said a trader at a Chinese bank. "In addition, Sino-U.S. tensions have worsened following the SMIC incident, so the market is being comparatively cautious." Proposed U.S. export curbs on chipmaker SMIC threaten to derail China's growing domestic semiconductor supply chain, and also hit American and Japanese companies who count the Chinese chipmaker as an important customer. Market expectations for yuan appreciation have temporarily moderated, with the currency likely to consolidate at current levels before resuming gains, the trader said. Traders and analysts are also watching developments in the U.S. presidential race for indications of the major candidates' stances on China policy. On Tuesday, U.S. President Donald Trump escalated attacks on rival Joe Biden over China, accusing the Democratic candidate of having an agenda "made in China". "With the approaching U.S. election, policy toward China has become a major part of the argument between the two parties' candidates, and there is a risk of worsening Sino-U.S. frictions. This presents a downside risk for the yuan," analysts at China Construction Bank said in a note. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.36, after touching a four-month high of 93.49 on Tuesday. The global dollar index fell to 93.484 from the previous close of 93.542. The yuan market at 4:01AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.8423 6.8364 -0.09% Spot yuan 6.8486 6.847 -0.02% Divergence from 0.09% midpoint* Spot change YTD 1.67% Spot change since 2005 20.85% revaluation Key indexes: Item Current Previous Change Thomson 93.36 93.47 -0.1 Reuters/HKEX CNH index Dollar index 93.484 93.542 -0.1 *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.8539 -0.08% * Offshore 7.0125 -2.43% non-deliverable forwards ** *Premium for offshore spot over onshore **Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. . (Reporting by Andrew Galbraith in Shanghai and Rong Ma in Beijing; editing by Richard Pullin)
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