Yuan hits 2022 high against weaker dollar, but upside seen limited

China's yuan strengthened on Wednesday to its highest level so far this year against the dollar, but gains were capped as softer inflation left the door open for more monetary easing in the world's second-largest economy.

The rise came as the dollar fell to its weakest level since November against major peers after Federal Reserve Chair Jerome Powell said it may take several months to make a decision on running down the central bank's $9 trillion balance sheet.

China's factory-gate inflation rose more slowly than expected in December after the government took steps to contain lofty raw material prices. Softer inflation leaves