The yuan closed onshore at 6.356 against the US dollar on Wednesday, capping its biggest quarterly decline and the bumpiest ride in more than two decades, following an unexpected devaluation in August.
Analysts said the currency was poised to weaken further, although less dramatically, as markets had digested the prospect of yuan weakness and after reassurance by Beijing that there was no basis for further depreciation.
"Fundamentals will play a bigger role in determining the yuan rates going forward after the revamp of the exchange rate regime," said Xie Yaxuan, the chief economist at China Merchant Securities. "The latest retreat of the yuan is more of a 'correction' after the markets calmed down and the overwhelming jittery sentiment is not going to persist."
The yuan weakened 2.49 per cent onshore between July and September, compared with a 0.05 per cent decline in the previous quarter, while it softened by 2.4 per cent offshore compared with a 0.07 per cent loss between April and July.
On August 11, a 2 per cent reduction in the yuan's reference rate by the People's Bank of China spurred a sell-off of the currency and a subsequent capital flight on fears of a significant deceleration by the world's second-biggest economy.
Yuan deposits in Hong Kong declined by 1.5 per cent to 979 billion yuan (HK$1.19 trillion) at the end of August, according to an announcement by the Hong Kong Monetary Authority on Wednesday.
The devaluation of the yuan has prompted depositors to exchange their yuan back into Hong Kong dollars since August, pushing the Hong Kong dollar to hit the top end of its peg to the US dollar at HK$7.75.