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Yuan holds ground against broadly stronger dollar, underpinned by bond index inclusion

    SHANGHAI, Sept 28 (Reuters) - The yuan was largely flat on
Monday, unable to build on the momentum drawn from China's
inclusion in a global bond index due to the U.S. dollar's strong
rebound on global markets.
    Moving forward, investors expect the addition of Chinese
bonds to FTSE Russell's World Government Bond Index (WGBI) to
boost capital inflows and the yuan.
    But for now the coming Golden Week holiday, from Oct.1-8,
will keep trade subdued and rates range-bound, traders said.  
    The spot market opened at 6.8180 per dollar and
was changing hands at 6.8210 at midday, 10 pips firmer than the
previous late session close.
    Onshore spot yuan swung in a tight range of less than 100
pips on Monday morning.
    Economists at OCBC Bank said in a note they expected the
dollar-yuan rate to trade in a range of 6.8-6.85 in the near
term.
    In global markets, the dollar hovered near a
two-month peak.
    Some yuan traders said they would closely monitor the U.S.
presidential debate and political news ahead of the election, as
it is likely to be the key risk in coming weeks.
    Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.8252 per dollar, 131 pips
or 0.19% weaker than the previous fix of 6.8121. 
    The global dollar index traded at 94.496 at midday,
when the offshore yuan was changing hands at 6.8272 per
dollar. 
    
    The yuan market at 0401 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.8252   6.8121    -0.19%
                                       
 Spot yuan          6.821    6.822     0.01%
                                       
 Divergence from    -0.06%             
 midpoint*                             
 Spot change YTD                       2.08%
 Spot change since 2005                21.34%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         94.11       93.99     0.1
 Reuters/HKEX                          
 CNH index                             
 Dollar index    94.496      94.543    -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    6.8272    -0.09%
        *                        
 Offshore              6.9809    -2.23%
 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 Simon
Cameron-Moore)
  
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