Yuan's depreciating march against Dollar, to start the year with is getting quite an attention among market players, especially the offshore counterpart. Today's relentless depreciation is offshore Yuan, which is already down -1.1% against Dollar is historical record (except for PBoC guided depreciation in last August).

People's Bank of China (PBoC), has now weakened Renminbi/Yuan fix for seventh consecutive day leading to some speculation in the market that PBoC might be behind depreciation of Yuan.

However, we, at FxWirePro, think otherwise........ PBoC is not guiding Yuan weak but having difficulty to manage its depreciation against Dollar, and market is playing greater role in Yuan depreciation for several below mentioned reasons.

Onshore Yuan is restricted to trading range of 2% on either side of central parity or fix but onshore counterpart is not. PBoC action though is definitely a guide for Yuan's movement, the bank has lesser influence on the offshore market.

During August devaluations, PBoC had announced it would give greater weightage to market value of Yuan while deciding on the daily fix. PBoC today, depreciated the fix by 0.22%, while analysts were expecting PBoC to strengthen it or weaken by smaller amount, since Yuan in Tuesday was strong in onshore market.

However, 0.22% weakening of fix is smaller compared to move in the onshore market on Tuesday. Moreover Tuesday's softening of fix by 0.21%, when Yuan depreciated by 0.61% on Monday suggest PBoC might not be fuelling the drop this time around.

However, PBoC might also not be spending billions of Dollar to pop up Yuan and prevent decline.

Yuan is currently trading at 6.72 per Dollar in offshore market.