Policymakers have also expressed concern about strength in the euro, although a recent weakening of the currency has lowered expectations about major policy changes.
"In general, we believe the yuan will remains strong against the dollar this year, but the size of appreciation won't be as huge as last year," Wang said.
Yields in 10-year bonds were one basis point higher at 1.78%. They reached a 23-month high of 1.97% on Feb. 26 on bets of rate hikes as early as next year. Bond futures were also stable at 98.229.
Speculators cut their net short dollar positions in the latest week to $27.80 billion, which is the smallest short position since Dec. 15 and suggests that dollar bears are giving up on betting against the greenback.
The weaker fixing has pushed China's trade-weighted yuan basket index to 97.06, the highest since June 22, 2018, according to Reuters' calculation based on official data.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint at 6.4904 yuan per dollar, 146 pips, or 0.22%, weaker than the previous fix of 6.4758. It was the weakest since Jan. 4.
Meanwhile, European Central Bank board member Fabio Panetta said the bloc's monetary authority should expand bond purchases or even increase the quota earmarked for them if needed to keep yields down.
Canada's current account deficit narrowed to C$7.3 billion in the fourth quarter from a revised C$10.5 billion deficit in the third quarter, Statistics Canada said. Canada's fourth-quarter GDP data is due on Tuesday.
On the other hand, the Australian dollar dropped as much as 0.45% before erasing some losses to trade at $0.7766, after the Reserve Bank of Australia re-committed to keeping interest rates at historic lows.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.4754 per dollar, 41 pips or 0.06% softer than the previous fix of 6.4713, and the weakest since Jan. 28.