China's yuan edged down against the dollar on Wednesday, approaching its lowest reading since early 2011, after the central bank weakened the midpoint for a third straight session to a new five-year low amid further greenback strength. The dollar index that tracks the greenback against a basket of major currencies gained 0.4 percent on Tuesday and retained its gains, standing at 95.835 around midday, buoyed by expectations of a near-term US interest rate hike.
The People's Bank of China set the midpoint rate at 6.5889 per dollar prior to market open, 0.15 percent weaker than the previous fix 6.579 and within market expectations. Spot yuan opened at 6.5840 per dollar and was changing hands at 6.5940 at midday, 0.24 percent weaker than the previous close. The spot rate came within a whisker of its January trough of 6.5956, which was the softest level since February 2011.
The offshore yuan was trading 0.07 percent softer than the onshore spot at 6.5984 per dollar. "It's true that overall market sentiment is a bit panicky right now but the mood is not reflected in the deals we strike," said a trader at a Chinese commercial bank in Shanghai.