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China's yuan touches 28-month high on Biden presidency

    SHANGHAI, Nov 9 (Reuters) - The yuan rose to a more than
28-month high against an easing dollar on Monday, underpinned by
improving market sentiment as investors welcomed Joe Biden's
election as U.S. president.
    Investors believed that a Biden presidency could mean less
uncertainty in foreign and trade policy towards China and
expected that he was unlikely to re-open the trade war, which
has weighed on the Chinese yuan over the last two years.
    Onshore spot yuan opened at 6.5950 per dollar and
jumped to 6.57 in early trade, the strongest since June 26,
2018. By midday, it was changing hands at 6.5825, 254 pips
firmer than the previous late session close.
    Chinese state media also struck an optimistic tone in
editorials on Monday reacting to the Democratic candidates
victory, saying relations could be restored to a state of
greater predictability and could start with trade.
    "We think RMB has priced in the pause of the escalation of
U.S.-China trade war," Tommy Xie, head of Greater China research
at OCBC Bank in Singapore, said in a note. 
    "The near-term outlook of the currency may depend on the
global risk sentiment as well as broad dollar trajectory.
Nevertheless, a deeply divided U.S. as shown by the election
this year is not really a good thing for China as the risk to
find a common enemy to unite the divided nation is getting
higher, which may shift the Biden Administration's foreign
policy over the next four years." 
    Several currency traders said the market refrained from
testing new highs in the yuan after hitting the loftiest level
in 28 months in initial trade.
    "Many have adopted a wait-and-see strategy," said a trader
at a Chinese bank, saying investors were waiting for more
clarity on Biden's policies before making further bets on the
    A second trader at a Chinese bank said investors were also
cautious as the authorities might not tolerate such rapid gains
in the yuan.
    Prior to market opening, the People's Bank of China (PBOC)
set the midpoint at a 28-month high of 6.6123 per
dollar, firmer than the previous fix of 6.6290. 
    The global dollar index fell to 92.166 at midday from
the previous close of 92.167. 
    The offshore yuan was trading at 6.5703 per dollar
by midday. 
    The yuan market at 0402 GMT: 
 Item               Current  Previous  Change
 PBOC midpoint      6.6123   6.629     0.25%
 Spot yuan          6.5825   6.6079    0.39%
 Divergence from    -0.45%             
 Spot change YTD                       5.78%
 Spot change since 2005                25.73%
    Key indexes:
 Item            Current     Previous  Change
 Thomson         95.66       95.35     0.3
 CNH index                             
 Dollar index    92.166      92.167    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

 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.5703    0.19%
 Offshore              6.7399    -1.89%
*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)