Market forces rather than PBOC intention for competitive devaluation have been the driving factors behind the recent sharp weakening of the CNY, as well as the CNH, during the past two weeks.

In the past two weeks, the CNY has lost nearly 1.5 percent against the USD, while the offshore CNH has weakened slightly less by 1 percent. The PBOC's focus has shifted to maintain stability in the trade-weighted exchange rate, represented by the CFETS RMB index. USD/CNY daily fixing rate from the last two weeks have shown that the PBoC is intolerant to a rise of the CFETS RMB index.

In the two weeks since the 10 October, the dollar index has gained 1.8 percent and this has caused the PBoC to set a higher USD/CNY fixing rate so as to guide the spot USD/CNY and USD/CNH higher.

"We expect the renminbi to continue being dictated by market terms in the coming months. But FX intervention is not off the table due to the concern about capital outflows. We maintain our 3M forecast of USD/CNY at 6.75 and 6.9 at the end of 2017," said Nordea Bank in a research note.