SHANGHAI: The yuan edged lower against the dollar on Tuesday, as companies bought the greenback hovering near four-week lows, offsetting suspected state-bank intervention to shore up the Chinese currency.
Easing expectations of an imminent US interest rate increase will likely reduce pressure on the yuan in coming weeks, but traders said the central bank will continue to hold a firm line on the renminbi to discourage speculators.
The People's Bank of China set the midpoint rate at 6.5618 per dollar prior to market open, 0.18 percent weaker than the previous fix 6.5497.
Spot yuan opened at 6.5655 per dollar and was changing hands at 6.5718 at midday, easing 0.12 percent from the previous close.
Traders noted that state-owned banks were offering dollars at 6.57 to combat surging corporate dollar demand in early trade, and then retreated to 6.5720 around where the market dollar supply and demand reached a rough equilibrium.
State-owned banks typically intervene in the forex market on behalf of the central bank, having offered dollars since early January to shore up the yuan when the Chinese currency is faced with depreciation pressure, traders said.
The yuan is expected to weaken around 2.5 percent over the coming year, a Reuters poll showed last week, pressured by cooling economic growth and expectations for US rates to trend higher.
The offshore yuan was trading 0.07 percent softer than the onshore spot at 6.5761 per dollar.
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