Yuan hits near two-week high on hopes of easing Mideast tensions

SHANGHAI, June 24 (Reuters) - China's yuan strengthened to its highest level in nearly two weeks against a broadly weaker U.S. dollar on Tuesday as global risk appetite improved following U.S. President Donald Trump's announcement of a ceasefire between Israel and Iran.

The onshore yuan CNY=CFXS rose to 7.1718 per dollar, its strongest level since June 12, while the offshore yuan CNH=D3 firmed to its highest since June 13.

U.S. President Donald Trump announced on Monday a complete ceasefire between Israel and Iran, potentially ending the 12-day war that saw millions flee Tehran and prompted fears of further escalation in the war-torn region.

But there was no confirmation from Israel and the Israeli military reported four volleys of missiles were launched from Iran towards Israel in the early hours of Tuesday.

The dollar index =USD, which measures the greenback against six major currencies was 0.110% lower at 98.13.

"Sino-U.S. negotiations remain highly uncertain, and with the domestic economic recovery still sluggish, any appreciation in the yuan is likely to be passive and limited in scope," said a currency trader based in Shanghai, who declined to be named as he is not authorised to talk to media.

The yuan is 1.7% firmer against the dollar this year, while the dollar is down 9.5%.

Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 7.1656 per dollar, its strongest since November 2024 and 51 pips weaker than a Reuters' estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

The spot yuan CNY=CFXS opened at 7.1718 per dollar and was last trading at 7.1765 as of 0311 GMT, 7 pips firmer than the previous late session close and 0.15% weaker than the midpoint.

The offshore yuan traded at 7.1751 yuan per dollar CNH=, up about 0.01% in Asian trade.

The Hong Kong dollar HKD=D3 slipped to 7.85 per U.S. dollar on Tuesday, hitting the weaker end of its trading band for the third consecutive session. Investors are watching closely if the Hong Kong Monetary Authority will drain liquidity from the banking system to support the currency.

LEVELS AT 0311 GMT