SHANGHAI, Nov 4 (Reuters) - The yuan weakened to a more than three-week low against a rising dollar on Wednesday, as some preliminary results suggested President Donald Trump led Democratic challenger Joe Biden in battleground states Florida and Texas. Speculative bets that Biden would win the White House have turbocharged the strongest yuan rally in years, as many investors expected him to adopt a multilateral approach and less likely to prolong a trade war. The yuan has been heavily affected by the Sino-U.S. relations since the outbreak of the trade war in 2018. Morning trade was volatile as onshore and offshore markets took cues from the dollar's reaction to fast changing election dynamics. The onshore spot yuan opened at 6.6990 per dollar and fell to a low of 6.7537 at one point, the weakest level since Oct. 13. By midday, it had recovered to 6.7200, still 430 pips weaker than the previous late session close. Its offshore counterpart weakened about 1.5% against the greenback in morning trade before recovering slightly to 6.7309 per dollar by midday. Yuan traders said many market participants trimmed their pre-election positions for a Biden presidency in morning trade. "Markets seem to be pricing in better chances for Trump, or at least a smaller chance of a blue wave," said Stephen Innes, chief global markets strategist at axi. "It remains hard to tell who will win," said a trader at a Chinese bank, expecting more volatility in the yuan over the rest of the day. In the options market, implied volatility remained elevated after overnight tenor hit a record high a day earlier. "In this context, continue to expect volatility in the RMB space in the coming sessions," Terence Wu, FX strategist at OCBC Bank, said in a note. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at an over one-week high of 6.6771 per dollar, 186 pips or 0.28% firmer than the previous fix of 6.6957. The global dollar index rose to 93.967 at midday from the previous close of 93.133. The yuan market at 0413 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.6771 6.6957 0.28% Spot yuan 6.72 6.677 -0.64% Divergence from 0.64% midpoint* Spot change YTD 3.62% Spot change since 2005 23.16% revaluation Key indexes: Item Current Previous Change Thomson 94.81 95.33 -0.6 Reuters/HKEX CNH index Dollar index 93.967 93.133 0.9 *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 6.7309 -0.16% * Offshore 6.89 -3.09% 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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