HONG KONG: China's yuan edged down against the dollar on Tuesday, after the central bank weakened its official midpoint for the second day to reflect an overnight rise in the dollar index.
Traders say recent rapid yuan appreciation has led to some profit taking this week, while the People's Bank of China (PBOC) also appears to be intervening through state-owned banks to prevent the yuan from rising too fast.
Spot yuan traded at 6.0872 near midday, down 0.03 percent from the previous close. The PBOC set its midpoint at 6.1373, or 0.06 percent weaker than Monday's 6.1336.
"We see big Chinese banks buying dollars in the market which offsets strong corporate demand to sell dollars," said a trader with a Chinese bank in Shanghai.
"The yuan has gained too much recently which also triggered profit taking by squaring short dollar positions," the trader said.
The latest round of yuan appreciation saw the Chinese currency gain around 0.6 percent against the dollar within two weeks and hit a historic high of 6.0802 on Friday.
The market is also cautious in the run-up to the much anticipated plenum meeting of the Communist Party in November, where President Xi Jinping is expected to press for greater economic reforms.
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