In August, the yuan has lost more than 3.7% versus the dollar.
On Thursday, spot yuan snapped a 10-day losing streak, the longest since December 2015, as Beijing and Washington gave signs they discussed a coming round of face-to-face negotiations in September, raising hopes to end the costly trade war.
But early Friday, onshore yuan slipped after opening at 7.1495 per dollar and was changing hands at 7.1511 at midday, 81 pips weaker than the Thursday late session close.
The People's Bank of China set Friday's official yuan midpoint at its weakest in 11-1/2 years, though for a fourth straight day it was much stronger than the market expected, signaling the central bank's intention to slow the currency's decline.
The PBOC set the midpoint at 7.0879 per dollar, 21 pips weaker than Thursday's fix of 7.0858 and the weakest since March 14, 2008.
Friday's official guidance rate was 318 pips or 0.45% stronger than Reuters' estimate of 7.1237 per dollar.
At the start of August, U.S. President Donald Trump threatened to slap fresh tariffs on Chinese goods. Days later, China let its currency slide past the key 7 per dollar level for the first time since the global financial crisis, and Washington labelled it a currency manipulator.
Analysts and traders believe that during August, the central bank heavily used its counter-cyclical factor, a tool introduced to the midpoint fixing mechanism in May 2017, to reduce price swings.
Traders said corporate demand for dollars remained heavy on Friday morning, dragging spot yuan lower.
"If there are no more new tariffs, the spot yuan is likely to consolidate at current levels," said a chief trader at a Chinese bank in Shanghai, adding that it could strengthen if implementation of U.S. tariffs is delayed.
Becky Liu, head of China macro strategy at Standard Chartered Bank in Hong Kong, said in a note she expects Chinese authorities "to avoid heavy-handed intervention to maintain USD-CNY at or under any specific level."
"The authorities will likely allow further depreciation in an orderly manner, while continuing to curb excessive sudden movements," she added, revising her year-end forecast for the yuan to 7.23 per dollar from 6.86 in July.