Yuan Holds Near 3-1/2-Year High as July Exports Beat Forecasts

China's yuan remained firm against the U.S. dollar on Friday, hovering close to a 3-1/2-year peak, after official data showed exports grew faster than expected in July.

Domestic exports rose 23.9% in dollar terms from a year earlier, easing from June's 27% surge but beating the 22.2% forecast in a poll of economists. The strong trade performance continues to underpin the world's second-largest economy.

"Export growth continued to support the economy in July. I expect exports to remain strong in the third quarter," said Zhiwei Zhang, chief economist at Pinpoint Asset Management. He added that the massive trade surplus would lend further support to the yuan.

The spot yuan was trading at 6.7470 per dollar as of 0255 GMT, up 0.07% on the day, within a narrow range of 6.7466 to 6.7501. It remains close to the 6.7455 level touched earlier this week, its strongest in 3-1/2 years. The currency is on track for a sixth consecutive weekly gain.

Ahead of market open, the People's Bank of China set the daily midpoint rate at 6.7904 per dollar, 356 pips weaker than market estimates. Spot trading is allowed to move 2% on either side of the fixing.

Investors are also watching U.S. jobs data due later in the day for signals on the Federal Reserve's policy direction. The dollar index, which measures the greenback against six major currencies, stood at 99.95, weighed down by uncertainties around reopening the Strait of Hormuz.

The yuan has gained 0.6% against the dollar this month and is up 3.7% for the year, supported by an export boom and dollar weakness. The offshore yuan traded at 6.7459 per dollar, up about 0.03% in Asian trade.