SHANGHAI, Sept 29 (Reuters) - The yuan slipped in quiet trade on Tuesday, with traders possibly trimming their exposure to the Chinese currency as the market wound down ahead of the Golden Week holiday, which runs from Oct. 1-8. The People's Bank of China set the midpoint rate at 6.8171 per dollar prior to market open, 81 pips firmer than the previous fix of 6.8252. Spot yuan opened at 6.8210 per dollar before easing to 6.8234 at midday, 128 pips weaker than the previous late session close. The dollar was steady against a basket of currencies on Tuesday as traders looked forward to the first U.S. presidential debate later in the day (Wednesday 0100 GMT), and developments on the U.S. stimulus bill. Except in 2004, the dollar index tended to rise in October as the U.S. election approached as the uncertainties reinforced safehaven demand for the greenback，Ming Ming, chief macro analyst at CITIC Securities, wrote in report. Analysts also noted investors could reduce their exposure to yuan as a precaution in case of any increase in Sino-U.S. tensions during the long holiday break. "While the RMB market lacked clear directions, market participants might incline to reduce their long RMB position to mitigate the headline risk of China-US tensions during the holiday," said Ken Cheung, chief Asia FX strategist at Mizuho, in a report. China's factory activity likely expanded at a slightly faster pace in September, a Reuters poll showed on Monday. China's vast industrial sector is steadily returning to levels seen before the pandemic paralysed huge swathes of the economy early this year. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.04, weaker than the previous day's 94.08. The global dollar index rose to 94.207 from the previous close of 94.156. The offshore yuan was trading at 6.8267 per dollar. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.9919, -2.50 percent away from the midpoint. One-year NDFs are settled against the midpoint, not the spot rate. The yuan market at 4:08AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.8171 6.8252 0.12% Spot yuan 6.8234 6.8106 -0.19% Divergence from 0.09% midpoint* Spot change YTD 2.05% Spot change since 2005 21.30% revaluation Key indexes: Item Current Previous Change Thomson 94.04 94.08 0.0 Reuters/HKEX CNH index Dollar index 94.207 94.156 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 6.8267 -0.05% * Offshore 6.9919 -2.50% 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 Luoyan Liu, Han Xiao and Brenda Goh; Editing by Simon Cameron-Moore)
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