SHANGHAI, Nov 5 (Reuters) - The yuan rebounded on Thursday as growing prospects of a Joe Biden presidency in the United States raised investor expectations of a less problematic trade relationship between the world's two largest economies. Victories in Michigan and Wisconsin gave Biden a critical boost in the race against President Donald Trump to obtain 270 votes in the state-by-state Electoral College needed to win the White House. The yuan had a roller-coaster ride in the previous two days, swinging from an over three-week low to a near 28-month high, as investor sentiment was heavily affected by the dollar's reaction to the fast changing election dynamics. "The USD/CNH was perhaps the most reactive pair to the odds of a Trump upset," said Terence Wu, FX strategist at OCBC Bank. "The prospects of a Biden win, and perhaps a more conventional and rules-based trade policy eventually pushed the pair to close at a low of 6.6200, our target for a RMB-positive election outcome." In the spot market, the onshore spot yuan opened at 6.6400 per dollar and jumped to a high of 6.6381 at one point, the strongest level since July 10, 2018. By midday, it was changing hands at 6.6506, 44 pips firmer than the previous late session close. Many investors expect a Biden presidency should benefit the yuan, as he is more likely to adopt a multilateral approach and less likely to prolong Trump's trade war that has weighed on the Chinese currency over the last two years. While the spot market did not immediately react to Chinese President Xi Jinping's pledge to expand imports in the next decade, traders said opening-up measures should benefit the yuan in the long run. Xi told the opening of an annual import show that China will import over $22 trillion worth of goods over the next decade and that the economy is continuing to open up despite the coronavirus pandemic. "China's further opening-up of its domestic trade and financial markets will certainly boost the CNH, KRW and SGD particularly if Biden wins the presidency," Gao Qi, strategist at Scotiabank in Singapore, said in note. Prior to market opening, the People's Bank of China set the midpoint rate at 6.6895 per dollar, 124 pips or 0.19% weaker than the previous fix of 6.6771. The global dollar index fell to 93.384 at midday, when the offshore yuan was trading at 6.645 per dollar as of midday. The yuan market at 0401 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.6895 6.6771 -0.19% Spot yuan 6.6506 6.655 0.07% Divergence from -0.58% midpoint* Spot change YTD 4.70% Spot change since 2005 24.45% revaluation Key indexes: Item Current Previous Change Thomson 95.56 94.93 0.7 Reuters/HKEX CNH index Dollar index 93.384 93.401 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 morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.645 0.08% * Offshore 6.8126 -1.81% 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 Sam Holmes)
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