The Chinese yuan briefly fell to four-month low in the offshore market on Wednesday as a deepening stock market rout prompted investors to cut their long positions in the Chinese currency, though a broadly stable onshore market helped it recover ground. Concerns that a broader equity market rout would spread to other asset classes such as currencies and bonds spurred some hedge funds who had bought the Chinese yuan in the spot and the forward markets to cut their positions.
Falling for the fourth straight session, the offshore yuan touched its weakest level since March 18, changing hands at 6.2188 per dollar by midday, before steadying at the end of the day. In the onshore market, the spot yuan ended at 6.2094 per dollar, barely changed from the previous close of 6.21. Traders said the onshore yuan was unlikely to break 6.21 per dollar level as China's central bank has showed its determination to maintain the currency stable for now. The People's Bank of China (PBOC) set the midpoint rate at 6.1175 per dollar prior to market open, 0.01 percent weaker than the previous fix at 6.1166.