Yuan firms as dollar eases on tempered Mideast fears, robust China exports

SHANGHAI, March 10 (Reuters) - The yuan strengthened on Tuesday and the dollar eased on bets that the war in the Middle East may be shorter than expected, as resilient Chinese exports kept the currency on a firmer trajectory.

The spot yuan CNY=CFXS opened at 6.8918 per dollar and was last trading at 6.8853 at 0255 GMT, 232 pips firmer than the previous late-session close.

China's export growth picked up pace in the January-to-February period, expanding 21.8% from a year earlier in U.S. dollar value terms, while imports jumped 19.8%, customs data showed on Tuesday. Both numbers were well above market expectations.

The dollar pared gains after U.S. President Donald Trump told CBS he thinks the war against Iran "is very complete," allaying investor worries about a protracted conflict that could disrupt global energy supplies and weigh on economic growth.

Prior to the market opening, the People's Bank of China set the yuan's midpoint rate CNY=PBOC at 6.8982 per dollar, its strongest since April 25, 2023, some 91 pips weaker than a Reuters estimate.

Analysts at Industrial Securities said the yuan's recent weakness - triggered by a stronger dollar since the U.S. and Israel first attacked Iran in late February - does not signal a turn in the currency's broader uptrend.

They noted the yuan's decline has been milder than the dollar's rise, suggesting the currency's underlying support remained intact and the dollar shock is likely a marginal disturbance.

Over a longer horizon, China's producer price index is expected to turn positive, easing competitive pressure at home, and relative risk-return dynamics are rebalancing in favor of Chinese assets, which have been outperforming overseas peers, they said.

The offshore yuan traded at 6.8892 yuan per dollar CNH=, up about 0.03% in Asian trade.

The dollar index =USD, which measures the greenback against a basket of six currencies, was 0.025% higher at 98.89.

LEVELS AT 0255 GMT