Mubasher: China’s central bank on Thursday reduced its official yuan (CNY) midpoint below the psychologically important CNY 7-per-dollar level, the lowest level since the global financial crisis.

The People’s Bank of China (PBoC) set the midpoint rate at CNY 7.0039 per US dollar ahead of market opening, compared with the prior fixing of CNY 6.9996. This marked the weakest level seen since 21 April, 2008.

The broadly weak official guidance rate followed losses in the spot yuan in the prior session, as the offshore currency continued to be dragged down by an escalation in the trade tensions between the US and China.

Last week, US President Donald Trump announced that he would levy a 10% duty on an additional $300 billion worth of Chinese goods as from 1 September.

Earlier this week, the Chinese yuan dived past CNY 7 a dollar.

The US Treasury Department designated Beijing as a currency manipulator.

Bank of America Merrill Lynch (BAML) projected that the Chinese currency could fall beyond CNY 7.5 against the greenback, if President Trump proceeds to raise the tariff rate to 25% on the recently taxed Chinese goods.

By 12:18 pm GMT, the USD/CNY pair declined by 0.19% to CNY 7.0466.