Yuan closes 0.23 pct lower as Chinese banks sell

 SHANGHAI, June 22 (Reuters) - China's yuan slipped 0.23
percent on Tuesday, giving up more than half the gains it made on
Monday, a move that suggests the central bank has adopted a new
strategy to control the pace of yuan gains.

 The yuan jumped at the start of the day after the People's
Bank of China set the mid-point for trade at a surprisingly
strong 6.7980 CNY=SAEC per dollar, little changed from Monday's
close.

 But heavy selling of yuan for dollars by Chinese banks
quickly drove the yuan CNY=CFXS well off an early trading high
of 6.7900 per dollar -- the strongest since the 2005 revaluation
-- and as low as 6.8229 before closing at 6.8136.

 On Monday, the currency posted its biggest one-day rise since
the revaluation, rising nearly half a percent and almost touching
the upper end of its daily trading band.

 Some traders believe the dollar buying by state-owned banks
was on behalf of the PBOC to avoid direct market intervention.

 By letting state-owned banks buy dollars, the PBOC is
effectively limiting the market's ability to short dollar/yuan --
especially because banks are not allowed to hold short positions
overnight in the spot currency market.
 (Reporting by Lu Jianxin and Jason Subler; Editing by Edmund
Klamann)