China's yuan ended lower against the dollar on Wednesday after the People's Bank of China set a weaker mid-point to reflect a rally in the US Dollar Index, driven by renewed tensions on the Korean peninsula. But the 0.18 percent 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 1.2 percent jump in the dollar index on Tuesday, reflecting the central bank's wish to prevent too much volatility.
Spot yuan closed at 6.6543 against the dollar, down from Tuesday's close of 6.6449 but still up 2.58 percent since the PBOC depegged the currency in mid-June. Before trading started, the PBOC set the day's mid-point at 6.6589, compared with Tuesday's 6.6469. Offshore, benchmark one-year non-deliverable forwards (NDFs) fell to 6.4990 bid in the late session from 6.5080 at Tuesday's close, with their implied yuan appreciation in a year's time rising to 2.46 percent from 2.32 percent shown on Tuesday.
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