Yuan slips after PBOC sets weaker midpoint

SHANGHAI, Oct 13 (Reuters) - The yuan slipped on Tuesday after the central bank set a weaker than forecast midpoint.

Prior to the market open, the People’s Bank of China set the midpoint rate at 6.7296 per dollar, weaker than the previous fix of 6.7126 and market projections.

The spot market opened at 6.7580 per dollar and was changing hands at 6.7565 as of 0206 GMT, 105 pips weaker than the previous late session close.

The offshore yuan weakened to a low of 6.7650 in early Asian trade before trading at 6.7577 per dollar as of 0206 GMT.

The PBOC wanted to slow the yuan appreciation but it did not want to lead the yuan into depreciation, said Bruce Yam, forex strategist at brokerage Everbright Sun Hung Kai.

The pressure for yuan appreciation remains, he said.

Over the weekend, the People’s Bank of China (PBOC) announced it would lower to zero from 20% the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading, with effect from Monday.

The reduction, which effectively lowers the cost of shorting the Chinese currency, came after a recent sharp rally in the yuan. (Reporting by Luoyan Liu and Andrew Galbraith; editing by Richard Pullin)