SHANGHAI: China's yuan edged weaker on Wednesday, backtracking further from a record high set at the start of the week, after the central bank set a slightly weaker midpoint in response to a rise in the dollar in global markets.
Spot yuan slid 0.02 percent from Tuesday's close to 6.2125 per dollar near midday, weaker than the psychologically significant 6.21 barrier.
Traders previously said they detected signs of central bank intervention to weaken the yuan when it strengthened beyond 6.21, as it did on Monday, when it touched a record high of 6.2095.
The slide in the spot rate matched the change in the People's Bank of China's (PBOC) daily midpoint. The PBOC fixed the yuan at 6.2727, 0.02 percent weaker than Tuesday's midpoint.
The slight weakening in the midpoint came after the dollar index, which tracks the greenback's value against a basket of global currencies, gained slightly overnight.
Traders say the PBOC is likely to hold the yuan steady at around 6.21 over the next several weeks.
Large trade surpluses, a desire by Chinese corporates to convert their forex receipts into local currency, and signs of hot money inflows in the early months of 2013 were all fuelling market pressure for the yuan to appreciate.
The PBOC appears willing to tolerate mild appreciation, authorities are still using the daily midpoint to restrain the pace of the currency's rise.
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