SHANGHAI, Dec 2 (Reuters) - China's yuan extended gains against the dollar on Monday after the head of the central bank made it known that China would not resort to a competitive devaluation and would aim to keep the currency broadly stable.
Yi Gang, Governor of the People's Bank of China (PBOC) laid out the authorities stance toward the yuan in an article published in the Communist Party's theoretical journal Qiushi.
Prior to market opening on Monday, the PBOC set the midpoint rate CNY=PBOC at 7.0262 per dollar, 36 pips firmer than the previous fix of 7.0298.
In the spot market, onshore yuan CNY=CFXS opened at 7.0282 per dollar and was changing hands at 7.0293 at midday, 27 pips firmer than the previous late session close.
The yuan notched its third straight monthly gain in November, but traders said they were reluctant to chase the currency higher while there was still uncertainty over a possible interim deal between China and the United States to begin de-escalating their trade war.
"The narrative on the U.S.-China Phase One deal shifted at the beginning of November from 'detente' to being about real potential 'de-escalation' centered around rollback in tariffs," Stephen Innes, chief Asia market strategist at AxiTrader said in a note.
A dealer at a Chinese bank also said traders wanted official confirmation on the trade deal and tariff rollbacks before opening large long position in the yuan.
News website Axios reported on Sunday a source close to U.S. President Donald Trump's negotiating team saying the trade deal between United States and China was now "stalled because of Hong Kong legislation".
Official data released over the weekend showed that factory activity in China unexpectedly returned to growth in November for the first time in seven months, while a private survey also suggested manufacturing expanded at the quickest pace in almost three years last month.
The global dollar index .DXY rose to 98.318 at midday from the previous close of 98.273.
The offshore yuan CNH=D3 was trading at 7.0295 per dollar as of midday.
The yuan market at 0356 GMT:
PBOC midpoint CNY=SAEC
Spot yuan CNY=CFXS
Divergence from midpoint*
Spot change YTD
Spot change since 2005 revaluation
Thomson Reuters/HKEX CNH index
*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 percent from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
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