shanghai nov 30 reuters  chinas yuan strengthened to a twoweek high against the dollar on tuesday and looked set to notch a fourth straight monthly gain underpinned by persistent corporate demand and signs of liquidity tightness in the money markets prior to market opening the peoples bank of china pboc set the midpoint at a near twomonth high of 63794 yuan per dollar 78 pips or 012 firmer than the previous fix of 63872 the midpoint fix was largely in line with market forecasts traders said and it was 1 pip weaker than reuters estimate of 63793 per dollar in the spot market the onshore yuan opened at 63788 per dollar and rose to a high of 63711 the strongest level since nov 16 by midday it was changing hands at 63716 160 pips firmer than the previous late session close if the yuan finishes the late night session at the midday level it would have gained 052 against the dollar for the month traders said along with the firmer guidance rate and persistent corporate conversion of their dollar receipts into the local currency the yuan also gained support in early deals from tighter cash conditions in the domestic money markets due to monthend demand the volumeweighted average rate of the benchmark overnight repo traded in the interbank market was at 21739 the highest level since oct 19 and dollaryuan swap points for the same tenor also jumped to 235 points from previous close of 48 while investor worries over the economic impact of the new omicron coronavirus variant ebbed some analysts raised the possibility of the variant affecting the us federal reserves policy tightening trajectory we expect market risk appetite to improve after the shortterm volatility  but it is undeniable that market confidence would weaken after the outbreaks said marco sun chief financial markets analyst at mufg bank if the situation of the omicron variant deteriorates the fed may postpone its first interest rate hike he said adding the fed outlook could stoke volatility in other major currencies including the yuan hu yifan regional chief investment officer and chief china economist at ubs global wealth management also argued that the yuans value would eventually be determined by economic fundamentals and policy divergence between the worlds two largest economies would pile downward pressure on the chinese currency we believe the yuan will have some mild depreciation from the current level driven by shrinking yield gap between china and the united states  as the us is slowly exiting quantitative easing while china is rolling out more easing measures she said hu expects china to lower the reserve requirement ratio rrr before the lunar new year holiday in late january next year and forecast the yuan to weaken to 655 per dollar at endmarch before hitting 660 in june divergence of the dollaryuan exchange rate negative number indicates that spot yuan is trading stronger than the midpoint the peoples bank of china pboc allows the exchange rate to rise or fall 2 from official midpoint rate it sets each morning figure reflects difference from pbocs official midpoint since nondeliverable forwards are settled against the midpoint  reporting by winni zhou and andrew galbraith editing by shri navaratnam