SHANGHAI, Aug 20 (Reuters) - The yuan eased off seven-month highs hit a day earlier, as the dollar rebounded and the market took in stride no change to a benchmark lending rate for corporate and household loans. The dollar clung to Wednesday's gains, after minutes from the latest U.S. Federal Reserve meeting gave few clues about whether an even more dovish shift in its policy framework is possible in the autumn, disappointing some dollar bears. Prior to market opening on Thursday, the People's Bank of China set the midpoint rate at 6.9274 per dollar, 0.15% weaker than the previous fix of 6.9168. Onshore yuan opened at 6.9292 per dollar and was changing hands at 6.9219 at midday, 26 pips weaker than the previous late session close. The spot price hit a high of 6.9034 on Wednesday, the strongest since Jan. 22. Traders said the yuan's medium-term outlook was still dependent on Sino-U.S. relations. A Bloomberg News report on Thursday, citing an unnamed source, said that Beijing and Washington planned to reschedule trade talks postponed from last weekend. Earlier, U.S. President Donald Trump said he had postponed the Aug. 15 review of the trade agreement signed with China in January given his frustration over Beijing's handling of the coronavirus pandemic. "I postponed talks with China. You know why? I don't want to deal with them now." As long as the trade deal remained intact, the yuan should be supported in the longer run, said a trader at a Chinese bank. Meanwhile, the market had a muted reaction after China kept the loan prime rate (LPR) steady at its August fixing, as expected and for the fourth month in a row. Iris Pang, chief economist for Greater China at ING, said Thursday's move could indicate there would be no broad-based easing for the rest of the year. "We expect monetary policy on interest rates ... to remain the same for the rest of 2020 as China's COVID-19 infection cases have been stabilised," she said. "We also expect there will be no broad-based reserve requirement ratio (RRR) cut, but there could be targeted RRR cut or targeted re-lending for small and mid-sized enterprises (SMEs) and the agricultural sector." Pang expects the yuan to finish the year at 6.97 per dollar. The yuan market at 0401 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.9274 6.9168 -0.15% Spot yuan 6.9219 6.9193 -0.04% Divergence from -0.08% midpoint* Spot change YTD 0.60% Spot change since 2005 19.57% revaluation Key indexes: Item Current Previous Change Thomson 92.28 91.92 0.4 Reuters/HKEX CNH index Dollar index 92.974 92.991 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 6.9182 0.05% * Offshore 7.0626 -1.91% 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 Jacqueline Wong)
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