Yuan slips

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SHANGHAI: China´s yuan weakened slightly against the U.S. dollar on Friday after the central bank fixed its official guidance lower for a second straight day since it made changes to the midpoint mechanism last Friday.

The People´s Bank of China set the midpoint rate at 6.7971 per dollar prior to market open, weaker than the previous fix 6.7930.

The weakness in the yuan midpoint followed the dollar´s broad gains overseas after British Prime Minister Theresa May´s Conservative Party appeared set to fall short of an expected majority in a general election.

The China Foreign Exchange Trade System (CFETS) trading platform, overseen by the People´s Bank of China (PBOC), said last Friday that a "counter-cyclical factor" would be introduced into the way it calculates the yuan´s reference rate each day allowing it to better reflect supply and demand.

In the domestic spot market, the yuan changed hands at 6.8000 per dollar at midday, only 5 pips away from the previous close and 0.04 percent softer than the midpoint. After opening at 6.8016 per dollar, the yuan weakened to a low of 6.8033 before recovering.