Yuan strengthens

SHANGHAI: The yuan inched up against the U.S. dollar on Tuesday, buoyed by a firmer official midpoint, but volume was thin as traders awaited an expected U.S. rate hike later in the week which some believe will be echoed by China´s central bank.

With a March 21 move by the Fed seen in the bag, the focus has turned to whether it will signal a faster pace of rate rises this year and whether that will finally breathe life into the soggy dollar, curbing gains in emerging market currencies.

The People´s Bank of China raised rates on its open market operations and medium-term lending facility by 5 basis points each after the Fed last raised its policy rate by 25 bps in December.

Some market watchers expect a similar symbolic move from the PBOC on Thursday in Asian time after China´s leaders signalled in parliament that they will keep risk prevention at the top of their agenda this year.