Mubasher: Chinese yuan (CNY) slid to a new 11-year low against the US dollar on Thursday, despite support from key state-run banks in both the spot and forward markets, Reuters reported.

Spot yuan declined to CNY 7.052 in early trade, the weakest since March 2008.

Prior to the market opening, the People’s Bank of China (PBoC) set the midpoint rate at CNY 7.049 per dollar, weaker than the previous fix of CNY 7.0433.

By 11:45 am GMT, the USD/CNY pair rose by 0.32% to CNY 7.0847.

State-run banks were supplied with dollar liquidity in the forwards market before selling the US currency in the onshore spot market, Reuters reported, citing two traders familiar with the matter.

Market sentiment was fragile, with news headlines barely offering hope of a trade deal between Washington and Beijing soon, and new US tariffs on Chinese imports are set to take effect in 1 September.

President Donald Trump on Wednesday he was “the chosen one” to handle trade imbalances with China, despite congressional researchers warned that tariffs would hurt the US economic output.

“The market pays very close attention to the China-US trade dispute, and its impact on the yuan is much heavier than other factors, such as economic fundamentals,” said a Shanghai-based Chinese bank trader was quoted by the news agency.