The Chinese yuan continued to weaken on Friday after the US Federal Reserve hinted at a December interest rate increase, intensifying concerns over capital outflows from emerging markets to the US. Offshore yuan traded in Hong Kong declined for the fifth day in a row, dropping 0.1 per cent or 71 points to 6.9103 as of 3.40pm, after slipping to 6.9119 earlier on Friday, its lowest level since the offshore market was launched in 2010. Onshore yuan traded in Shanghai declined 0.23 per cent or 155 points to 6.8905 before sliding to 6.8910, its lowest level since June 2008. Both offshore and onshore yuan continued to trade around 6.9 on Friday, a level regarded by officials and analysts as psychologically important. China’s central bank on Friday set the daily fixing lower for the eleventh day, down 104 basis points, or 0.15 per cent weaker at 6.8796, the lowest level since June 2008. Trading is allowed up to 2 per cent either side of the reference point for that day. Federal Reserve chair Janet Yellen said the central bank is close to raising interest rates as the US economy continues to strengthen. Her remarks during a Congressional hearing on Thursday lifted the US dollar and 10-year Treasury yields. The US dollar index continued to consolidate recent gains, trading 0.28 per cent higher at 101.17. Dickie Wong, executive director of research at Kingston Financial Group, said higher rates will strengthen the dollar but weaken yuan. “I still see some room for yuan’s depreciation as the US dollar will continue to strengthen following a rate rise and I expect a quicker pace of rate rises in the coming two years,” said Wong, who forecasts 1 per cent depreciation of Chinese yuan by the end of this year.