Yuan sinks past 7 dollar to over decade low as trade tensions heat up

On Monday China's yuan tumbled more than 1% to 11-year lows on mounting fears over a sharp escalation in the U.S.-China trade war, sparking a sell-off in other currencies in the region. The yuan broke through 7 per dollar, which some market players have regarded as a major support level, falling to as low as 7.1097 per dollar in offshore trade and 7.0424 to the dollar onshore.

"This could well be the biggest moment for the yuan this year. The impact of U.S.-China trade is turning out to be very big, - said Masashi Hashimoto, senior currency analyst at MUFG Bank - The People's Bank of China is trying to stem the yuan's fall."

The yuan last stood down 1.4% at 7.0793 offshore, and 1.1% at 7.0166 onshore. It was the first time the yuan traded above 7 per dollar since May 2008. The sharp fall came after Beijing vowed on Friday to fight back against U.S. President Donald Trump's abrupt decision to slap 10% tariffs on the remaining $300 billion in Chinese imports.

The Korean won fell 1%, hitting a three-year low of 1,218.3 per dollar while the new Taiwan dollar fell more than 0.5% to a two-month low of 31.61 to a dollar. The Australian dollar slipped 0.5% to $ 0.6770, hitting a seven-month low of $0.6748.

The U.S. dollar was on the back foot against traditional safe-haven currencies. The dollar fell to as low as 105.80 yen, its weakest since its January flash-crash, and last stood at 106.07 yen, down 0.5%. The euro also rose 0.15% to $1.1122 (EUR=EBS), extending its recovery from a two-year low of $1.1027 touched on Thursday.