Amidst escalation in trade war, yuan's midpoint set at weakest level in 4 months

China's central bank lowered its official yuan midpoint to 6.8365 per dollar on Tuesday, the weakest level in more than four months, following a fresh escalation in the Sino-U.S. trade war. Tuesday's midpoint was 411 pips, or 0.6 per cent, weaker than the previous fix of 6.7954 and was the softest since Jan. 8.

The move in the official guidance rate was the biggest one-day weakening in percentage terms since Feb. 11. However, traders said Tuesday's official fixing came in much higher than market expectations, as it did in the previous two sessions. The midpoint was 199 pips firmer than Reuters' estimate of 6.8564. China's yuan on Monday weakened to a four-month low, wiping out all of this year's gains.