Yuan against Dollar: China's yuan witnessed a slight depreciation against the dollar on Wednesday amidst persistent deflationary pressures in the country, while market participants eagerly awaited upcoming US inflation data to assess the potential timing of Federal Reserve interest rate adjustments.

Before the market opened, the People's Bank of China established the midpoint rate, which guides the yuan's trading within a 2 per cent band, at 7.1075 per US dollar. 

The figure represented a weaker stance compared to the previous fix of 7.1057. 

The spot yuan commenced trading at 7.1957 per dollar and was seen at 7.1990 midday, registering a 9-pip decline from the previous late session close.

The central bank persisted in its long-standing approach of setting rates firmer than market expectations, a move widely interpreted by traders as an effort to safeguard the currency. 

Wednesday's midpoint exceeded a Reuters estimate of 7.2023 by 948 pips.

Barclays analysts stressed upon the challenges facing China, citing weak domestic activity, subdued exports, the looming threat of deflation, and vulnerabilities in the external balance. 

Moreover, the property sector remained under pressure, with reports that property behemoth Country Garden faced a liquidation petition for failing to repay a $205 million loan.

Despite expectations for further yuan depreciation in the coming weeks, Barclays noted China's strong political resolve to maintain relative stability in the yuan-dollar exchange rate.

Attention turned to US inflation data and initial jobless claims slated for Thursday, which promised insights into the trajectory of US interest rates this year. 

The global dollar index saw a rise to 103.877 from its previous close at 103.829.

In offshore trading, the yuan traded at 7.2143 per dollar, representing a -0.21 per cent deviation from the onshore spot rate.

(With Reuters Inputs)