SHANGHAI: China’s yuan on Tuesday rebounded from a one-week low hit a day earlier, although investors were still keeping a close eye on the possible spillover effects of a mainland stock selloff on currency markets.

Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate at 6.4734 per dollar, 29 pips firmer than the previous fix of 6.4763.

In the spot market, the onshore yuan bounced from a one-week low of 6.4877 per dollar hit a day earlier and traded at 6.4760 by midday, 65 pips firmer than the previous late session close.

Despite a marginal bounce from Monday’s lows, traders said market sentiment remained rather weak as investors continued to gauge potential capital outflow risks amid a powerful regulatory crackdown on some sectors.

“The rise in regulatory risk in China has led to equity sell-offs, but its impact on the RMB has been relatively limited thus far,” strategists at OCBC Bank in Singapore said in a note.