Onshore yuan traded in Shanghai slumped for a third straight day, dropping 0.48 per cent or 330 basis points to trade at 6.8420 at 6:00pm, after hitting a seven-year low at 6.8450.

China’s central bank on Monday set the daily fixing 176 basis points or 0.25 per cent weaker at 6.8291, the lowest level in more than seven years.

“This move suggests to us that the PBOC is in no serious mood to defend 6.82,” wrote Kevin Lai and Olivia Xia, analysts at Daiwa Capital Markets, in a note on Monday.

In the previous seven trading days the PBOC has lowered the daily reference rate more than 700 basis points.

The weaker yuan comes as the dollar extends gains following Donald Trump’s victory in the US presidential election.

The US Dollar Index, a gauge of the greenback against a basket of major currencies, rose 0.73 per cent to 99.79, the highest level this year, as investors anticipate higher government spending and more restrictions on trade under a Trump administration, both steps that could put an end to the low inflation which has ruled for the past decade.

Yields on the 30-year US Treasury note have continued to tick higher, recently edging above 3 per cent yesterday for the first time since January.

Market watchers were divided on the direction of the Chinese yuan in the weeks and months to come.

Tao Wang, China economist at UBS expect a continued weakening of the currency.

“Diverging policies between the US and Chinese governments as well as major central banks, along with persistent capital outflows are expected to drive the Chinese yuan lower against the US dollar,” Wang said.

Daiwa said they expect the downtrend to continue, reiterating their forecast for the yuan to weaken to 7.50 per dollar by the end of the year.

However, GuoTai JunAn analysts Xu hanfei and Qinhan said in a report they saw no obvious reasons for a further decline of the Chinese yuan . “Even a rebound could be possible for Chinese yuan in the future,” they added.

This story was corrected to add the word ‘no’ to the last sentence