China's yuan weakened on Friday as a cut in the country's credit rating by S&P offset stronger-than-expected growth in China's March manufacturing activity. The offshore yuan also slid more sharply, but signs of short-term liquidity stress in the offshore market evaporated, with the implied overnight deposit rate for CNH rising 0.726 percent after tanking as much as -27 percent on Thursday. "Today the offshore yuan was hit by the S&P downgrade, while the onshore market mainly followed the PBOC's midpoint," said a trader at a Chinese commercial bank in Shanghai.