SHANGHAI, May 24 (Reuters) - China's yuan weakened to a
near one-month-low on Friday, pressured by dollar strength
following strong U.S. economic indicators overnight and as
geopolitical tensions in the Taiwan Strait kept investors
    Prior to the market open, the People's Bank of China set the
midpoint rate, around which the yuan is allowed to
trade in a 2% band, at 7.1102 per U.S. dollar, weaker than the
previous fix of 7.1098. 
    The spot yuan opened at 7.2420 per dollar and was
changing hands at 7.2455 at midday, 33 pips weaker from the
previous late session close. 
    The dollar headed for its largest weekly rise in a month and
a half on Friday, after May figures showed U.S. business
activity accelerated to the highest level in just over two
years, damping most currencies including the yuan.
    The robust economic data along with hawkish minutes from the
Fed's last meeting earlier in the week has led traders to dial
back their bets on rate cuts this year, with markets now pricing
in just 35 basis points of easing in 2024, versus expectations
of 150 bps of cuts at the start of the year.           
    "PBoC tends to allow for more weakness in the RMB when the
external environment favours higher-for-longer rates and USD
strength," said Maybank analysts in a note.
    Investors also closely monitored regional tensions as
China's military carried out a second day of war games around
Taiwan on Friday, with drills to test their ability to "seize
power" and control key areas, exercises it has said were
launched to punish Taiwan's President Lai Ching-te.
    The global dollar index fell to 105.105 from the
previous close of 105.108. The offshore yuan was
trading at 7.2587 per dollar. 
    The yuan market at 3:38AM GMT: 
 Item               Current  Previous  Change
 PBOC midpoint                         
                    7.1102   7.1098    
 Spot yuan                             
                    7.2455   7.2422    
 Divergence from                       
 Spot change YTD                       
 Spot change since 2005                
 revaluation                            14.23%
*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% from official midpoint rate it sets each

 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan              
        *                        -0.18%
 non-deliverable                 1.10%
 forwards              7.0325    

 (Reporting by Shanghai Newsroom; Editing by Sonali Paul)