The yuan inched up against the dollar on Wednesday, underpinned by upbeat manufacturing data, with the Chinese unit on course for its best quarter since the global financial crisis in 2008.

China's factory activity extended solid growth in September, according to both official and private surveys, as the nation's crucial exports engine revved up on improving overseas demand and also underlined a steady economic recovery from the coronavirus shock.

Apart from the sound economic fundamentals, a broadly weaker dollar and continued capital inflows also supported the Chinese currency.

Spot yuan opened at 6.8115 per dollar before easing to 6.8120 at midday. If it retains all the gains at late-night close, the Chinese unit would have gained 3.71 percent to the dollar between July and September, marking the best quarter since the first quarter of 2008.

"With the confidence that RMB appreciation is no longer associated with one-way flows, herd mentality and speculative behavior, we believe the PBOC will continue with FX reforms, including RMB internationalization," HSBC said in a note, expecting the yuan to end the year at 6.70 per dollar and rise further to 6.60 at end-2021.

China's resilience, as the first country to suffer from the coronavirus and then bring it under control, has helped, said Jason Brady, president and chief executive of Thornburg Investment Management, in an interview with Wall Street Journal.

"What we do see is a strong Chinese economy, which is part of what's behind the strong renminbi," he said, using another name for the currency.

(With input from Reuters)