SHANGHAI, Dec 22 (Reuters) - China"s yuan was largely flat on Tuesday in thin trading ahead of the holidays, against a wait-and-see backdrop as a new coronavirus strain dulls vaccination optimism. The People"s Bank of China (PBOC) set the midpoint rate at 6.5387 per dollar prior to market open, 120 pips firmer than the previous fix of 6.5507. The spot market opened at 6.5469 per dollar and was changing hands at 6.5519 at midday, 18 pips firmer than the previous late-session close. Traders said the yuan could remain range-bound for the moment, tracking similar moves in the U.S. dollar as the Christmas and New Year holiday nears. The dollar was firm on Tuesday but traded well below peaks hit on a wild ride higher overnight, as a new coronavirus strain in Britain sent jitters through holiday-thinned currency markets. "The trading activity usually decreased after mid-December when people started to leave for holidays," said Bruce Yam, forex strategist at brokerage Everbright Sun Hung Kai. He said the PBOC also did not want the yuan to rally too much for now as it could hurt the country"s exports. Focus was also on the new variant of the coronavirus. A trader at a Chinese bank said eyes are on whether vaccines are effective against the new variant which could have impact on economic recovery. Countries across the globe shut their borders to Britain on Monday due to fears about a highly infectious new coronavirus strain, causing travel chaos and raising the prospect of food shortages days before Britain is set to leave the European Union. The resurgence of coronavirus outbreak in Europe has limited impact on China"s economy and exports, Wang Han, chief economist at Industrial Securities, said in a note. Separately, Sino-U.S. tension continued to weigh on China" currency. The United States on Monday imposed additional visa restrictions on Chinese officials over alleged human rights abuses, taking further action against Beijing in the final month of U.S. President Donald Trump"s term. The Trump administration on Monday published a list of Chinese and Russian companies with alleged military ties that restrict them from buying a wide range of U.S. goods and technology. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.08, weaker than the previous day"s 95.22. The global dollar index rose to 90.252 from the previous close of 90.132. The offshore yuan was trading at 6.5424 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 6.6935, -2.31 percent away from the midpoint. One-year NDFs are settled against the midpoint, not the spot rate. The yuan market at 4:28AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.5387 6.5507 0.18% Spot yuan 6.5519 6.5501 -0.03% Divergence from 0.20% midpoint* Spot change YTD 6.28% Spot change since 2005 26.32% revaluation Key indexes: Item Current Previous Change Thomson 95.08 95.22 -0.2 Reuters/HKEX CNH index Dollar index 90.252 90.132 0.1 *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% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.5424 0.15% * Offshore 6.6935 -2.31% non-deliverable forwards ** *Premium for offshore spot over onshore **Figure reflects difference from PBOC"s official midpoint, since non-deliverable forwards are settled against the midpoint. . (Reporting by Luoyan Liu, Jindong Zhang and Brenda Goh; Editing by Christopher Cushing)