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Yuan firms on robust exports, firmer-than-expected guidance

    SHANGHAI, Sept 7 (Reuters) - The yuan edged up against the
dollar on Monday helped by strong exports and
firmer-than-expected central bank guidance that countered
worries about a possible U.S. ban on China's Semiconductor
Manufacturing International Corp (SMIC).
    China's exports rose for the third consecutive month in
August, eclipsing an extended fall in imports, as more of its
trading partners relaxed coronavirus lockdowns.
    The data suggests a more sustained recovery for the world's
second-largest economy, which is rebounding from a record
first-quarter slump helped largely by stimulus measures.
    Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.8386 per dollar, 27 pips
weaker than the previous fix of 6.8359. However, it was slightly
firmer than market projections of 6.8420.
    Investors are trying to get a sense of whether the central
bank is comfortable with the currency's recent sharp rally.
    The fixing lifted the yuan higher in the spot market. The
onshore yuan opened at 6.8300 per dollar and was
changing hands at 6.8290 at midday, 145 pips firmer than the
previous late session close.
    Bets on a stronger yuan are mounting in spite of some risk
factors, dealers said.
    Policies aimed at reviving China's economy through domestic
demand and foreign investment could add further momentum to a
currency that has risen more than 4% against the dollar since
the end of May.
    Curbing bullish sentiment, however, were reports that
China's SMIC could be added to the Trump Administration's trade
blacklist in a sign of rising tensions between Beijing and
Washington.
    "Over the long run, the dollar weakening trend has not
changed. But market needs to pay attention to risk factors
including the epidemic, U.S. presidential election and
geopolitics," analysts at China Construction Bank (Asia) said in
a note, warning it could face some selling pressure at 6.83 per
dollar.
    The global dollar index fell to 92.869 at midday,
when the offshore yuan was trading at 6.8306 per
dollar. 
    
    The yuan market at 0400 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.8386   6.8359    -0.04%
                                       
 Spot yuan          6.829    6.8435    0.21%
                                       
 Divergence from    -0.14%             
 midpoint*                             
 Spot change YTD                       1.97%
 Spot change since 2005                21.20%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         93.39       93.22     0.2
 Reuters/HKEX                          
 CNH index                             
 Dollar index    92.869      92.876    0.0
 
*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    6.8306    -0.02%
        *                        
 Offshore              6.9786    -2.01%
 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 Winni Zhou and Andrew Galbraith; Editing by
Jacqueline Wong)
  
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