SHANGHAI: China's yuan fell slightly against the dollar for the second day on Tuesday, pushed down by corporate demand for dollars after the central bank set another weaker midpoint, traders said.
Spot yuan stood at 6.2109 per dollar by midday, 0.08 percent weaker than Monday's close, after the People's Bank of China (PBOC) fixed its official midpoint at 6.1490 per dollar, down 0.01 percent from Monday's fix.
Chinese companies and banks have tended to keep more dollars on hand in recent months after the PBOC engineered a steep yuan depreciation in the first four months of the year to stop speculation the currency would keep on rising. That has changed market anticipation of the future value of the yuan.
Economic data issued on Tuesday did not have an immediate impact on the yuan's movements, traders said, with the market waiting for Chinese GDP data on Wednesday.
Chinese banks gave a much stronger-than expected 1.08 trillion yuan ($173.9 billion) in new loans in June. That plus other data on Tuesday showed how Beijing was stepping up efforts to stimulate the world's second-largest economy.
"The data means China's economy has recovered to some extent. That will boost the yuan's value in the longer term," said a trader at a city commercial bank in Shanghai.
Rules published on Monday showed the State Administration of Foreign Exchange (SAFE) had loosened currency controls to make it easier for domestic companies and individuals to set up special purpose vehicles (SPVs) overseas.
"From a long-term perspective, dollar demand is expected to rise under the new rules, as it will be easier for companies and individuals to purchase dollars to conduct overseas investment," said a trader at a foreign bank in Shanghai.
But the rules did not have an immediate impact on the yuan's value on Tuesday, traders said.
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