Global Market: China's yuan holds near four-year high as markets await Fed decision

The Chinese currency has gained 0.6% against the dollar this month and 4.9% so far this year.

The onshore yuan was down 0.01% at 6.6675 per dollar as of 0322 GMT, after trading in a range of 6.6667 to 6.6701. The currency remained close to the four-year high of 6.6660 touched in the previous session.

Markets broadly expect the US central bank to leave interest rates unchanged this week. However, persistent inflation pressures have raised expectations that the pause in rate hikes may not last long, Reuters reported.

Investors will focus on the Fed's guidance for clues on whether elevated energy prices and inflation risks could prompt further monetary tightening. A hawkish stance from the central bank could put pressure on Asian currencies, analysts at MUFG said in a research note, according to Reuters.

Before the market opened, the People's Bank of China set the yuan's daily midpoint at 6.7165 per dollar, 431 pips weaker than a Reuters estimate. China's central bank allows the onshore yuan to trade within a 2% band on either side of the daily midpoint.

The yuan has drawn support from robust manufacturing data. Industrial profits grew at a faster pace in September than market watchers had expected, driven largely by the computer, communication and other electronic equipment manufacturing sector, Reuters reported.

The Chinese currency has gained 0.6% against the dollar this month and 4.9% so far this year.

Meanwhile, the offshore yuan edged down around 0.02% to 6.666 per dollar in Asian trading. The dollar index, which measures the US currency against a basket of six major currencies, rose 0.029% to 102.39.