China's yuan inches higher as PBOC sets firmer guidance

By Summer Zhen

HONG KONG, Nov 12 (Reuters) - China's yuan ticked up against the dollar on Thursday after the country's central bank set a stronger daily midpoint, though gains were capped by a firmer greenback amid rising bets for a Federal Reserve rate hike.

The spot yuan was 0.1% higher at 6.6684 to the dollar as of 0323 GMT, after trading in a range of 6.6667 to 6.6718.

Before the market opened, the People's Bank of China set the midpoint rate at 6.7174 per dollar, 377 pips weaker than a Reuters estimate, but firmer than 6.7191 per dollar in the previous session.

The spot yuan is allowed to trade 2% either side of a fixed midpoint each day.

While robust exports and corporate FX settlements provide a floor for the Chinese currency, a firmer dollar index in the near term "eased expectations of one-way yuan appreciation," ICBC (Asia) research said in a note.

The dollar climbed to a 19-month high against its major peers on Thursday, as traders ramped up bets on further Fed tightening after stronger-than-expected October inflation data.

Meanwhile, China has stepped up a series of measures to moderate the rise of the yuan given a prolonged currency rally could squeeze exporters' wafer-thin margins.

The yuan is down 0.2% against the dollar this month and is 4.9% firmer this year.

The offshore yuan traded at 6.6678 yuan per dollar , up about 0.09% in Asian trade.

The dollar's six-currency index was 0.175% higher at 103.05.

LEVELS AT 0322 GMT