The central parity rate of the Chinese currency, the renminbi or the yuan, weakened 124 basis points to 6.8096 against the U.S. dollar Tuesday, according to the China Foreign Exchange Trade System.
Under China's market-based, managed floating exchange rate system, the yuan is allowed to rise or fall by 2 percent against the dollar from the central parity rate in the spot market each trading day.
The central parity rate is a weighted average of quotes from dealer banks and follows a formula based on the previous day's closing rate and changes in a basket of selected currencies.
The greenback has edged higher since the U.S. Federal Reserve raised interest rates last Wednesday and announced it would begin cutting its holdings of bonds and other securities later this year, while indicating that a recent softening in inflation was seen as transitory.
The dollar index, which measures the greenback against six major peers,rose to 97.609 at one point on Tuesday, its highest level since May 30.
Measured by the central parity rate, the yuan has appreciated more than 2 percent against the greenback so far this year, with more than half of that in the past month.
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