SHANGHAI: China’s yuan slipped against the dollar on Friday, dragged lower by expectations of a further widening in yield differentials between the world’s two biggest economies after major Chinese commercial banks cut deposit rates.

China’s Big Five banks announced that they would cut interest rates on some deposits from Friday, with market watchers widely interpreting the move as an attempt to pave the way for further reductions in policy rates to aid the economy.

Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.0953 per dollar, 59 pips firmer than the previous fix of 7.1012.