The Chinese central bank on Thursday set the yuan reference rate weaker than 7 to the U.S. dollar for the first time in 11 years and three months, deepening fears that the ongoing China-U.S. trade war will escalate into a currency conflict.
The People's Bank of China set its daily reference rate at 7.0039 yuan per dollar, 0.06 percent weaker than the previous day. The rate was last at the 7 yuan level in May 2008.
The central bank has set weaker daily reference rates for six consecutive trading days since Aug. 1 amid an escalating trade dispute with the United States, fueling speculation among market participants that Chinese currency authorities are tacitly allowing the yuan to weaken.