In the official market, the currency weakened slightly in a session characterised by wild swings and nervousness.

Selling pressure on the yuan pushed it to an intra-day low of 8.285, before buying by state banks prior to the close of trading lifted the currency to 8.2799 against 8.2795 on Thursday.

Dealers were surprised the People's Bank of China (PBOC) did not intervene, as it had done in recent days to keep it above the 8.28 level. But some analysts believed state banks were buying at the behest of PBOC.

Financial markets overseas feared Beijing would not be able to hold on to its vow not to devalue, amid a sagging Japanese yen. Japan's imports of mainland goods had fallen sharply in the first six months, adding to pressures on the yuan.

International investors in the mainland are already hedging against risk of devaluation by trying to borrow as much in yuan as possible from mainland banks and converting it into hard currencies to repay foreign currency loans.

But yesterday, a PBOC spokesman said the non-devaluation policy remained unchanged despite mounting overseas expectations of a downward adjustment.

He disputed a Japanese news agency report, which quoted a Shanghai newspaper as saying PBOC governor Dai Xianglong hinted at a possible devaluation, by allowing the yuan to adjust 'a little bit' to the US dollar.

'The report [in Shanghai Family News ] is untrue; Mr Dai did not say such a thing,' the spokesman said.

Asked if the non-devaluation policy still stands, he said: 'It is unchanged.'