The central bank had shown its resolve to stop the rot in the yuan by using state banks to drive implied overnight yuan interest rates above 90 percent in Hong Kong on Tuesday, making it prohibitively expensive to speculate against the yuan offshore. The squeeze on offshore yuan liquidity slackened on Wednesday, allowing the overnight rate to come back to 5.2/14.9 percent.
The People's Bank of China (PBOC) held the line for a fourth straight session by setting the yuan midpoint rate at 6.5630 per dollar prior to market open on Wednesday, virtually unchanged from the firmer fixes of the previous two days. The spot market opened at 6.5708 per dollar and was changing hands at 6.5786 at midday, 30 pips away from the previous close.