Chinese yuan slips from 3-1/2-year high after PBOC signals unease over rapid gains

According to Business Recorder, China's yuan slipped on Tuesday from a high of three and a half years against the dollar. The People's Bank of China set its daily midpoint 633 pips below a Reuters estimate, the biggest gap on the weaker side since February 27, which was read as unease over how fast the currency has climbed. Traders see the move as an effort to slow gains rather than a reversal of the trend.

The yuan has been among Asia's top performers this year, gaining about 4 per cent against the dollar. A rapid rise could, however, weaken China's export competitiveness just as the wider economy shows renewed signs of softness.

Onshore yuan stood 0.03 per cent lower at 6.7242 per dollar by 0305 GMT, compared with Friday's 6.7192 peak. Maybank analysts said in a note that the widening gap between fixings and estimates points to further resistance to gains, while markets also watched US-Iran tensions and Fed Chairman Kevin Warsh's debut speech at Jackson Hole.