China’s yuan rose on Friday, the final trading session of 2016, after the US dollar index retreated. The offshore yuan in Hong Kong was little changed, trading at 6.9655 to the US dollar as of 10.00am, while the onshore yuan in Shanghai strengthened for a second day, rising 0.13 per cent or 87 points at 6.9447. However, the gains on Friday do little to reverse perceptions of a currency destined to trend lower. As of Thursday’s close, the offshore yuan was down 6 per cent for the year, while onshore yuan suffered a 7 per cent decline. The People’s Bank of China on Friday set the yuan reference point against the US dollar at 6.9370, 127 basis points or 0.18 per cent stronger than its fixing on Thursday. Traders are allowed to trade up to 2 per cent either side of the reference point for the day. The yuan is likely to remain under pressure in the coming year amid likely trade disputes between China and US once Donald Trump is sworn in as president in late January, analysts at CITIC Futures Company said in a note. On Friday, the US dollar index dropped 0.39 per cent to 102.23 as of 10.05am, continuing to decline after touching 103.63 in overnight trade, as the intraday level approached a 14-year high of 103.650. China announced on Thursday that it will reduce the weighting of the US dollar in a basket of currencies it uses to value the yuan. The CFETS, the country’s foreign exchange trading platform operator, said on Thursday afternoon that from January 1, 2017, the US dollar weighting in the CFETS currency basket will be lowered to 0.2240 from 0.2640. In addition, the number of currencies in the basket will be increased to 24 from the current 13. Hong Hao, managing director of BOCOM International in Hong Kong said he does not believe the move will influence the yuan’s exchange rate against the US dollar. “The adjustment mainly aims to follow trading weights between China and its major trading partners,” Hong said. The British pounds continued its rebound, rising for a second days in a row to trade at 1.2286, up 0.24 per cent, gaining 29 basis points. For the year, the pound has slumped 17 per cent, as of Thursday. Meanwhile, the Japanese yen strengthened for a third day, advancing 0.18 per cent higher to 116.32 per US dollar.