The Chinese yuan softened versus the dollar on Wednesday, as dealers forecast the dollar's recent strength on global markets would help alleviate upward pressure on the Chinese currency. The yuan, which was revalued by 2.1 percent to 8.11 to the dollar on July 21, closed at 8.0924 per dollar, compared with Tuesday's 8.0910.
On global markets, the dollar extended this week's gains on Wednesday, hitting a two-year high versus the yen and a three-month peak against the euro after another top Federal Reserve official signalled interest rates would rise further.
Affected by the global trend, the yuan rose 1 percent versus the euro to close at 9.6138, compared with Tuesday's 9.7108, and strengthened 0.4 percent to end at 6.9844 per 100 yen, from 7.0118, the central bank said on its Web site.
"There is an increasing consensus here that the yuan is unlikely to strengthen solidly against the dollar in the near term - possibly not before the end of this year," said a dealer at a foreign bank.
Dealers said the yuan was likely to move narrowly around the 8.0900 level in coming weeks as the dollar's strength abroad helped offset a strong supply of the US currency at home.
On Wednesday, four deals between 61 and 366 days were done in onshore forwards. A 365-day contract was done at 7.8400, anticipating that the yuan would be 3.1 percent stronger in a year's time.