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Currencies

China sets yuan midpoint at new 11-1/2-year low

Central bank sets a firmer rate than traders had expected

SHANGHAI (Reuters) -- China's central bank lowered its official yuan midpoint to a fresh 11-1/2-year low on Tuesday, but at a firmer setting than traders had expected.

The People's Bank of China (PBOC) set the midpoint rate at 7.0810 per dollar prior to market open, 240 pips or 0.34% weaker than the previous fix of 7.0570 and the weakest since March 18, 2008.

The move in Tuesday's official guidance rate was the biggest daily weakening in percentage terms since Aug. 7.

But traders said Tuesday's official guidance rate came in much stronger than their forecasts, and they took it as an official attempt to slow the pace of yuan depreciation.

"Apparently, (the PBOC) intentionally lifted the yuan fixing to stabilise the market," said a trader at a Chinese bank.

The official fixing was 245 pips or 0.35% firmer than Reuters' estimate of 7.1055 per dollar.

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