China's yuan firmed on Monday, reflecting the U.S. dollar's broad declines as President Donald Trump's inability to pass a healthcare reform bill raised doubts about his ability to see through planned fiscal stimulus measures. The People's Bank of China set the midpoint rate at 6.8701 per dollar prior to market open, firmer than the previous fix 6.8845. The spot market opened at 6.8773 per dollar and was changing hands at 6.8735 at midday, strengthening over 100 pips from the previous late session close and 0.05 percent weaker than the midpoint. The spot rate is currently allowed to trade with a range 2 percent above or below the official fixing on any given day. "As the global dollar index dropped sharply overnight, there was strong demand to sell dollars early this morning, but the market has stablised now," said a trader at a Chinese bank in Shanghai. The dollar index against a basket of major currencies hit its lowest since Feb. 2 and was at 99.285 near midday. The Thomson Reuters\/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.14, weaker than the previous day's 94.22. Sentiment towards most emerging Asian currencies improved in the past two weeks, after the U.S. Federal Reserve gave less "hawkisk" interest rate guidance than some analysts had expected. Bets on the yuan turned slightly bullish. Also watch: Although long positions were estimated to be small, it was still the most upbeat that investors have been on the yuan since April last year. Money market participants remained cautious about cash conditions in China's interbank market as the financial quarter draws to an end. The Shanghai Interbank Offered Rate (SHIBOR) for the seven-day tenor rose slightly to 2.7993 percent, and was hovering around its highest level since mid 2015. There is some expectation that some banks will have more demand for cash to prepare for macroprudential assessments being carried out by the central bank. "The recent volatility in China's money market was the result of two factors, including tight bias monetary policy as well as seasonality due to quarter-end macroprudential assessment," said OCBC analysts in a note on Monday. "The tug of war between central bank and commercial banks to contain leverage is likely to continue. And the expectation on tighter monetary policy is likely to be the key weapon used by central bank to press financial institutions to de-leverage." The offshore yuan was trading 0.24 percent stronger than the onshore spot at 6.8568 per dollar. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 7.0655, 2.77 percent weaker than the midpoint. One-year NDFs are settled against the midpoint, not the spot rate. The yuan market at 3:37AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.8701 6.8845 0.21% Spot yuan 6.8735 6.885 0.17% Divergence from 0.05% midpoint* Spot change YTD 1.06% Spot change since 2005 20.41% revaluation Key indexes: Item Current Previous Change Thomson 94.14 94.22 -0.1 Reuters\/HKEX CNH index Dollar index 99.254 99.627 -0.4 *Divergence of the dollar\/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from official midpoint rate it sets each morning.