SHANGHAI, Oct 24 (Reuters) - China's yuan rose to a 10-day high against the dollar early on Thursday, after the cabinet announced steps to help the economy, but was flat at midday following heavy corporate demand for greenbacks. Beijing will boost imports of certain goods and improve policies on tax rebates, trade finance and insurance, and ease restrictions for capital account transactions, the state council or China's cabinet said on Wednesday. The state council also reaffirmed that China will keep the yuan basically stable and maintain reasonable foreign exchange reserves. Traders said although the statement on the yuan was a reiteration of existing policy, it boosted market sentiment and the currency on Thursday morning. Prior to market opening, the People's Bank of China set the midpoint rate at 7.0727 per dollar, 25 pips firmer than Wednesday's fix of 7.0752. Onshore spot yuan opened at 7.0667 per dollar and touched 7.0560, the strongest level since Oct. 14. As of midday, the yuan was changing hands at 7.0664, 3 pips firmer than the previous late session close. Stephen Innes, Asia Pacific market strategist at AxiTrader, said remarks by the state council reinforced the notion of a stable yuan and provided a soothing influence. "It appears that mainland officials are looking for more lasting measures, as opposed to toggling the monetary policy switch, to address the current economic malaise as China's economy is expected to face substantial downward pressure Q4 2019 and 2020," he said in a note. But several traders said that after the yuan rose above 7.06, interest in buying cheaper dollars quickly emerged, rolling back most of the Chinese currency's gains. A trader at a Chinese bank said the many corporate clients feel the yuan is likely to swing in a range of 7.05 to 7.1 before the Asia Pacific Economic Cooperation (APEC) summit next month, when a mini-trade deal between the China and the United States might be made. The global dollar index fell to 97.434 at midday from the previous close of 97.491. The offshore yuan was trading at 7.0634 per dollar as of midday.
The yuan market at 0403 GMT:
Item Current Previous ChangePBOC midpoint 7.0727 7.0752 0.04%Spot yuan 7.0664 7.0667 0.00%Divergence from -0.09%
Spot change YTD -2.74%Spot change since 2005 17.12%
Item Current Previous ChangeThomson 91.45 91.33 0.1
Reuters/HKEX CNH index
Dollar index 97.434 97.491 -0.1
*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 percent from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
Instrument Current Difference
Offshore spot yuan 7.0634 0.04%*Offshore 7.1219 -0.69%
*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 Richard Borsuk)