The yuan fell for the 11th straight day on Thursday, taking its losses during the period to 4 per cent against the US dollar. This decline comes after the People’s Bank of China lowered the currency’s daily fixing rate for a seventh consecutive day, a strong signal that the central bank wants to see a weaker yuan as it gears up for a possible all-out trade war with the US . The offshore yuan traded at a fresh six-month low of 6.6300 per US dollar on Thursday morning, down 0.2 per cent from Wednesday and 3.8 per cent from June 13, just before its 11-day losing streak began. It is becoming increasingly clear that global trade developments have weighed heavily on the yuan Lukman Otunuga, research analyst, FXTM The currency has tumbled every day since June 14, when the PBOC opted not to follow the US Federal reserve in increasing the interest rate. Its decline has also tracked the escalation in trade tension between the US and China. Why China’s central bank is not following US Fed on interest rates The PBOC set the yuan’s midpoint at 6.5960 per dollar on Thursday morning, down 0.6 per cent or 391 points from Wednesday’s 6.5569, which itself was 0.6 per cent lower than Tuesday. The central bank has lowered the midpoint for the last seven days in a row, reducing it by 2.7 per cent. It is now down 3.1 per cent from June 14. Lukman Otunuga, a research analyst at FXTM, a British foreign-currency trading company, said the PBOC’s tactic of lowering the official fixing of the yuan was an effort to cushion the effects of trade tariffs imposed by the US. Generally, a weaker yuan helps exporters by making their prices more competitive overseas. “The yuan has weakened to its lowest level this year against the US dollar with prices punching above the 6.6000 level. It is becoming increasingly clear that global trade developments have weighed heavily on the yuan,” Otunuga said. “While the yuan could recover if trade tensions start to ease, any signs of escalating trade war fears are likely to pressure the currency.” The yuan has never yet been allowed to trade freely. Its price depends on a daily fixing rate set by the PBOC every morning, around which it can only trade in a range of 2 per cent either side. The fixing rate is therefore seen by the market as a signal of the central bank’s strategy. Yuan drops through 6.60 level as Beijing signals it wants a weaker currency amid trade-war threat After PBOC set the fixing lower, the offshore yuan traded in the international market trade at 6.6300 per US dollar on Thursday morning, down 0.2 from previous close. and is now trading a fresh six month lowest. The yuan now traded at a similar level in mid December. The onshore yuan, traded in Shanghai, also hit a six-month low of 6.6247 against the greenback on Thursday morning, down 0.4 per cent from the previous close. Stephen Innes, head of trading for Asia-Pacific at forex trading company Oanda, expected the weak yuan would lead the US dollar higher against other emerging-market currencies during the trade war. “With the US dollar reasserting itself as the unquestionable hedge against an escalating trade war, there's no escaping the wrath of a stronger US dollar,” Innes said.