China's yuan firmed against the US dollar on Wednesday after the central bank set a stronger midpoint, but trading was subdued as markets awaited policy clues from the Federal Reserve which could heighten exchange rate volatility. The People's Bank of China set the midpoint rate at 6.8892 per dollar prior to the market open on Wednesday, firmer than the previous fix 6.8956.

In the spot market, the yuan opened at 6.8927 per dollar and was changing hands at 6.8929 at midday, 36 pips stronger than the previous late session close but 0.05 percent weaker than the midpoint. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.84, weaker than the previous day's 93.86.

The global dollar index fell to 98.907 from the previous close of 98.976. The offshore yuan was trading 0.06 percent away from the onshore spot at 6.8891 per dollar. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 7.082, -2.72 percent away from the midpoint.

Copyright Reuters, 2017