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China’s yuan pulled back from near seven-month highs against the U.S. dollar on Friday, after liquidity tightness eased slightly in Hong Kong and the greenback gained in global markets.

The People’s Bank of China set the midpoint rate at 6.8070 per dollar prior to market open, firmer than the previous fix of 6.8090. Friday’s official guidance via the daily midpoint was the strongest since Nov. 10.

Tightened yuan liquidity in Hong Kong had pushed the offshore yuan spot rate to a high of 6.7245 per dollar on Thursday, the strongest since October last year.

But offshore yuan gave up gains on Friday as liquidity stress appeared to ease up and the spot rate weakened to a low of 6.7926 per dollar before trading at 6.7905 as of 0333 GMT.

Hong Kong’s overnight yuan borrowing rate fell sharply from a near five-month high.

The CNH Hong Kong Interbank Offered Rate benchmark (CNH Hibor), set by the city’s Treasury Markets Association, fell to 8.67550 percent for overnight contracts, more than 34 percentage points lower than the previous fix of 42.81500 percent, which was the highest since Jan. 6.

The Hong Kong Monetary Authority (HKMA), replying to Reuters in an emailed statement, said the interbank market on the whole was operating in an orderly manner after it noted tightness in CNH liquidity and provided liquidity support to banks.

OCBC Bank said in a note that it expected “CNH will continue to be a liquidity play in the near term.”

Losses in offshore yuan also dragged down its onshore counterpart.

In the onshore spot market, the yuan opened at 6.8035 per dollar and was changing hands at 6.8148 as of 0333 GMT, 86 pips weaker than the previous late session close but 0.11 percent weaker than the midpoint.

After months of holding the yuan relatively stable against the dollar, China has suddenly allowed the currency to advance sharply since May 24, when Moody’s Investors Service downgraded its sovereign credit rating for the first time since 1989.

Li Liuyang, senior FX analyst at China Merchants Bank in Shanghai said the yuan “was catching up and reacting to the dollar movement overseas” after having traded steadily over the past two months.

Li added that the yuan would be tracking the global dollar index more closely in the near term.

The global dollar index, a gauge that measures the dollar strength against six other currencies, rose to 97.222 from the previous close of 97.198 on Friday after upbeat U.S. private sector job figures.

It is unclear whether the surge in the yuan against the dollar has stalled for now, with market views for a U.S. rate hike firming due to upbeat U.S. economic data.

Stephen Innes, senior trader at OANDA said the aggressive yuan bears will “either go into hibernation or take to the sidelines licking their wounds for the foreseeable future.”

Separately, the central bank-owned Financial News said on Friday the adjustment to the mechanism the PBOC uses to set the daily yuan midpoint was a pre-emptive move to offset the effects from expectations of a U.S. interest rate increase this month and the stresses of seasonal dollar demand.

The China Foreign Exchange Trade System (CFETS) trading platform, overseen by the central bank, said last Friday that a “counter-cyclical factor” would be introduced into the way it calculates the yuan’s reference rate each day, allowing it to better reflect supply and demand. (Reporting by Winni Zhou and John Ruwitch; Editing by Jacqueline Wong)