Chinese c.bank sets yuan mid-point at 6.7785

SHANGHAI, July 28 (Reuters) - The People's Bank of China fixed the yuan's daily mid-point CNY=SAEC lower at 6.7785 versus the dollar on Wednesday, while the International Monetary Fund has adjusted its wording on the Chinese currency, dropping the word "substantially" in describing the yuan's undervaluation.

Mid-point Previous day's mid-point Previous day's close

6.7785 6.7742 6.7786

Several directors of the IMF's Executive Board believe the yuan is undervalued, but an annual report on China made no mention of the exchange rate being "substantially" below value.

The board also commended China for dropping the yuan's 23-month-old peg to the dollar and reverting to a managed float.

"Several Directors agreed that the exchange rate is undervalued. However, a number of others disagreed with the staff's assessment of the level of the exchange rate, noting that it is based on uncertain forecasts of the current account surplus," the report said. [ID:nSUL000123]

Beijing has repeatedly bridled at the fund's long-running description of the yuan as being substantially undervalued.

The PBOC announced the depegging on June 19 and let the yuan appreciate as much as 0.87 percent against the dollar in the following two weeks.

But since then, the central bank has ceased to allow the yuan to appreciate by fixing a slew of weak mid-points. The yuan has now risen only 0.70 percent to the dollar since the depegging.

The PBOC issues mid-point data through the Shanghai-based interbank market, the China Foreign Exchange Trade System (CFETS), on the market's website, www.chinamoney.com.cn.

The yuan may rise or fall 0.5 percent against the dollar from its mid-point each day. (Reporting by Lu Jianxin and Jacqueline Wong)