The yuan closed down against the dollar on Thursday after the People's Bank of China set a weaker mid-point, reflecting a jump in the US dollar index in global markets due to upbeat economic data.
But the mere 27-pip fall in the PBOC's mid-point, or the level from which the yuan may rise or fall 0.5 percent each day, lagged far behind a jump of 1 percent in the dollar index on Wednesday. Dealers said that may reflect the central bank's intention not to let the yuan fall too much.
Spot yuan closed at 6.6265 versus the dollar, down from Wednesday's close of 6.6190. It hit a record high of 6.5896 last week.
Before trade began, the Chinese central bank fixed the yuan's mid-point versus the dollar at 6.6322, weaker than Wednesday's 6.6295.
But they still said the yuan's appreciation over the course of the year was inevitable as China wrestles with domestic concerns such as rising inflation and asset bubbles.
The market widely expects the yuan may rise 5-6 percent against the dollar in 2011 and that its upward trajectory would be particularly strong in the first half.
Benchmark one-year non-deliverable dollar/yuan forwards were bid at 6.4480, little changed from Wednesday's close of 6.4450. Their implied yuan appreciation in a year's time fell slightly to 2.86 percent from 2.90 percent.
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