The onshore yuan slid as much as 0.4% to 7.2996 per dollar before trimming declines, while its offshore peer was trading 0.2% weaker at 7.3014. The PBOC set the fixing, around which the currency is permitted to move by 2% on either side, at 7.1996.

State banks increased their dollar sales when the onshore yuan weakened toward 7.30, capping its losses, according to traders who asked not to be identified.

Chinese stocks also fell. The benchmark CSI 300 Index slipped as much as 0.6%, while the Hang Seng China Enterprises Index lost as much as 1.1% before erasing declines.

“Given the sentiment, it is important for the 7.20 fix level to hold, as any fix set higher would trigger more immediate dollar buying,” said Khoon Goh, head of Asia Research at Australia & New Zealand Banking Group. On top of the reference rate, “the PBOC has several tools it can use to stem the depreciation pressure,” he said.