Yuan holds steady after posting best month in nine, market monitors TikTok developments

    SHANGHAI, Aug 3 (Reuters) - The yuan was steady on Monday
after booking its best month in nine in July, as investors kept
a wary eye over tensions  between Beijing and Washington and the
fate of popular short-video app TikTok's U.S. operations.    
    Sources told Reuters that U.S. President Donald Trump has
agreed to give China's ByteDance 45 days to negotiate a sale of
TikTok to Microsoft Corp after U.S. officials have said
TikTok, under its Chinese parent, poses a national risk because
of the personal data it handles.
    Traders said TikTok issue and the broader tensions in
Sino-U.S. relations could affect the yuan's movements and market
sentiment in the near term.
    Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at one-week low of 6.998 per
dollar, 132 pips or 0.19% weaker than the previous fix of
    In the spot market, the onshore yuan opened at
6.9791 per dollar and was changing hands at 6.9743 at midday,
only 2 pips firmer than the previous late session close.
    The onshore yuan gained 1.3% to the dollar last month,
marking its best month since October 2019, mainly driven by a
broadly softer greenback as investors worried about a resurgence
of coronavirus cases in the United States.
    Li Liuyang, chief foreign exchange analyst at China
Merchants Bank in Shanghai, said the weaker dollar trend was
likely to continue in the medium term due to uncertainties
caused by the surging coronavirus cases in the United States and
the upcoming presidential election.
    "For this week, market could expect a phone call or meeting
between trade negotiators from China and United States," Li
said, noting speculation about a possible review of the Phase 1
trade deal agreed in January this year.
    The global dollar index rose to 93.453 at midday from
the previous close of 93.408. 
    The offshore yuan was trading at 6.9777 per dollar
by midday. 

    The yuan market at 0400 GMT: 
 Item               Current  Previous  Change
 PBOC midpoint      6.998    6.9848    -0.19%
 Spot yuan          6.9743   6.9745    0.00%
 Divergence from    -0.34%             
 Spot change YTD                       -0.16%
 Spot change since 2005                18.67%
    Key indexes:
 Item            Current     Previous  Change
 Thomson         91.75       91.17     0.6
 CNH index                             
 Dollar index    93.453      93.408    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    6.9777    -0.05%
 Offshore              7.1088    -1.56%
*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 Shri Navaratnam)