The Chinese yuan on Monday tumbled beyond 7 per dollar, the weakest in over a decade, as trade tensions between Beijing and Washington heat up.

The yuan — both offshore and onshore — broke through the key psychological barrier of 7 per dollar in morning trade on Monday, after China’s central bank set the currency’s daily reference rate at 6.9225 per dollar, the weakest since December. The onshore yuan depreciated beyond 7 per dollar soon after trading began at 9:30 a.m., a record low since April 2008.

Analysts said that the depreciation is linked to recent intensified trade frictions. U.S. President Donald Trump threatened on Thursday that the U.S. would impose an additional 10% tariff on an additional $300 billion of Chinese goods, beginning Sept. 1. Beijing also pledged to fight back if Washington goes ahead with the plan.

The People’s Bank of China said in a statement on Monday that the depreciation was affected by unilateralism, trade protectionism measures and the U.S.’ expected imposition of increased tariffs on Chinese goods.

“It will be harder for the government to defend the currency given the additional tariffs which could weigh on exports and add depreciation pressure to the currency,” Goldman Sachs analysts said in a Sunday note.

Read the full story later today on Caixin Global.

Contact reporter Timmy Shen (hongmingshen@caixin.com)

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