China's yuan rebounds as risk asset cheer Xi's speech

Xi made his remarks at Boao Forum for Asia, where he also promised to lower import tariffs on products including cars, and raise the foreign ownership limit in the automobile sector as soon as possible and push previously announced measures to open the financial sector.

Risk appetite improved broadly, traders said, with the dollar bouncing against the safe haven yen and U.S. stock futures and Asia shares advancing solidly.

The yuan also managed to recover most of Monday's losses against the dollar and edged up in the wake of Xi's comments.

Additional support for the yuan came from the People's Bank of China, which set the midpoint rate at 6.3071 per dollar prior to the open, 43 pips or 0.07 percent firmer than the previous fix of 6.3114.

In the spot market, the onshore yuan opened at 6.3071 per dollar, rallied to a high of 6.2903 before changing hands at 6.2972 at midday, 154 pips stronger than the previous late session close and 0.16 percent firmer versus the midpoint.

The offshore yuan was trading 0.05 percent up compared with the onshore spot at 6.2942 per dollar as of midday.

"Xi expressed his position today - he does not want a large-scale trade war with the United States ... The market is back to a risk-on tone," Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong.

Cheung was of the view that gains for the yuan, which has been on an appreciation trend against the dollar since last year, was limited. He expects the yuan to trade between 6.2 to 6.4 per dollar over the rest of this year.

The yuan is up 3.3 percent on the dollar so far this year, on top of gains of about 6.8 percent in 2017.

Some market participants also said Xi's speech has helped to squash speculation that Beijing might move to push down the yuan.

Citing unnamed sources, Bloomberg News reported on Monday that China is evaluating the potential impact of a gradual yuan depreciation as a tool in the escalating trade dispute with the United States.

"Investors need to be careful reading too much into all this...as any move to devalue the currency will bring back memories of 2015 and could cause irreparable damage to the yuan as far as internationalisation is concerned," Stephen Innes, head of trading for Asia-Pacific at OANDA said in a note.

Innes was referring to China's unexpected devaluation of the yuan in August 2015, which spread turmoil in global financial markets.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 97.76, firmer than the previous day's 97.49.

The global dollar index rose to 89.903 from the previous close of 89.838.

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 6.38, 1.14 percent weaker than the midpoint.