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China's yuan firms, defying weakest midpoint since Oct 2010

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China's yuan edged up against the US dollar on Tuesday after traders rushed to take profits on the long US dollar positions they built overnight, shrugging off the weakest midpoint the central bank has fixed since October 2010.

[SHANGHAI] China's yuan edged up against the US dollar on Tuesday after traders rushed to take profits on the long US dollar positions they built overnight, shrugging off the weakest midpoint the central bank has fixed since October 2010.

The yuan hovered around its 5-1/2 year low of 6.6980 set last Wednesday with traders saying the yuan might weaken to 6.7 any time soon, but the central bank was seen intervening in the market on Monday, controlling the pace of depreciation.

"The central bank has eased off intervention in general of late, but it still sporadically steps in, mainly for deterrence," said a trader at a Chinese commercial bank in Shanghai.

The People's Bank of China set the midpoint rate at 6.695 per US dollar prior to market open, 0.16 per cent weaker than the previous fix 6.6843, in response to the US dollar's global strength.

Spot yuan opened at 6.6935 per US dollar and was changing hands at 6.6886 at midday, firming 0.07 per cent from the previous close.

China's economic growth was expected to cool to a new seven-year low of 6.6 per cent in the second quarter as the industrial sector lost steam and a boost from financial services faded, a Reuters poll of 61 economists found.

China will issue June trade data on Wednesday and the second-quarter GDP data on Friday.

The offshore yuan was trading 0.2 per cent softer than the onshore spot at 6.7019 per US dollar.

REUTERS