The market was still weighing the possible impact of media reports saying Washington plans to raise tariffs on $200 billion of imported Chinese goods.

A Bloomberg report on Tuesday night said the United States and China were seeking to resume trade talks to defuse their battle over import tariffs.

Later media reports said that the US plans tariffs of 25 percent, instead of 10 percent, on $200 billion in Chinese imports. A source told Reuters that an announcement on Washington's tariff plans for China could come as early as Wednesday.

Prior to market opening, the People's Bank of China lowered the daily yuan midpoint to 6.8293 per dollar, 128 pips or 0.19 percent weaker than the previous fix of 6.8165.

Wednesday's fixing, the lowest since May 31, 2017, largely matched market forecasts, traders said.

In the spot market, the onshore yuan opened at 6.8220 per dollar, eased to a low of 6.8321 before ending its domestic trading session at 6.7948.

Frances Cheung, head of Asia macro strategy at Westpac in Singapore, said the market "chose to shrug off headlines on trade tensions as how the situation will evolve remains fluid. Market may have digested earlier China easing news, and shifted focus to the potential impact from pro-growth policy."

The pro-growth policy referred to China's fulfillment of its annual economic growth target, while it pledged to maintain a proactive fiscal policy and a prudent monetary policy to ensure ample liquidly, the official Xinhua news agency reported late Tuesday, citing a Politburo statement.

Robin Xing, chief China economist at Morgan Stanley told reporters in Shanghai that the recent depreciation in the yuan was mainly driven by market forces to correct the sharp rises in the yuan earlier this year.

He expects the yuan to "go back to its previous regime of relative stability against its basket" of currencies, but sees higher volatility if Sino-US trade tension intensifies. He maintained his forecast for the yuan to trade at 6.6 per dollar at the end of this year.

Separately, Mizuho Bank revised its year-end forecast for the yuan to trade at 6.8 per dollar, down from an earlier prediction of 6.55, due to "mounting China-US trade war risk and PBOC's non-intervention FX policy stance", it said in a note.

China's uncharacteristically laissez-faire approach to its swiftly declining currency is spawning market speculation that the yuan is part of an economic stimulus toolkit and will be allowed to weaken more over the rest of the year.

The offshore yuan was trading at 6.8150 per dollar as of 0942 GMT.