Chinese yuan bounced back on Tuesday morning after hitting a one month low on Monday but bankers believe the currency still face depreciation pressure in the near term.
The onshore yuan at 11:15 am traded at 6.3588, up 0.07 per cent from the Monday close when it has hit by market concerns on the slow progress of the International Monetary Fund decision to let the currency join its Special Drawing Rights basket.
The basket is now comprised of the US dollar, yen, euro and pound and China is keen to get the yuan added to raise its status as an international reserve currency.
The offshore yuan also bounced back slightly by 0.03 per cent to 6.3885 to the dollar.
The People’s Bank of China set the mid-price at 6.3602, down 24 basis points from Monday when it weakened the currency by 119 basis points.
Tommy Ong, managing director of treasury & markets of DBS Hong Kong, said the yuan faced depreciation pressures ahead.