Overnight, the offshore yuan soared 1.3 per cent or 930 basis points to hit 6.866 per dollar, breaching several psychologically important levels. The change marked its biggest percentage gain in about a year.

Nonetheless, the spot market was trading at 6.9290 per dollar by that time, stronger by 0.1 per cent or 52 basis points from 6.9342 in late night trade in the prior session.

On Thursday, the People’s Bank of China set the yuan’s mid-point rate at 6.928 per dollar, stronger by 219 basis points or 0.3 per cent – the biggest increase in a month.

“The relief [in the yuan’s fixing] comes from the retreating US dollar,” said Jingyi Pan, a market strategist for IG Group. The greenback declined on Wednesday, pulling back from its highest level in 14 years, after minutes from the Federal Reserve’s December meeting indicated policy makers were divided over the pace of interest rate increases.

The overnight surge in offshore yuan came after various media reports said the Chinese authorities were stepping up their intervention in the market to back the yuan and were considering new measures to tighten capital controls.

Possible plans include selling US Treasuries in 2017, if necessary, to defend the yuan, and ordering state-owned enterprises to temporarily convert some foreign currency holdings into yuan under the current account.

“China has tightened its scrutiny since the start of the new year, requiring individuals to specify the purpose of foreign currency purchases at banks.

The move has been widely interpreted as a sign that China will continue to keep a firm hand on capital outflows and the currency,” said analysts from Southwest Securities in a research note on Thursday.

On Wednesday, Hong Kong Exchanges and Clearing announced a plan to offer Renminbi Currency Options through a US dollar/offshore yuan contract in the first quarter of this year, due to growing market demand.