SHANGHAI: China’s onshore yuan fell on Wednesday to its weakest level against the dollar since the global financial crisis of 2008, while the offshore trades hit a record low, pressured by expectations of more Federal Reserve rate hikes.

Currency traders said the local currency was reacting to broad greenback strength in global markets as the dollar hit a fresh two-decade peak against a basket of currencies. The dollar has been buoyed by safe-haven demand and a hawkish Fed in recent days.

The onshore opened at 7.1800 per dollar and fell to a low of 7.2302 in early trade, the weakest since January 2008. It traded at 7.2233 at midday, 433 pips softer than the previous late session close.

The offshore yuan fell as far as 7.2349, the lowest level since such data became available in 2011.

It last traded at 7.2315 around midday.

Several currency traders said corporate dollar buying was very strong on Wednesday, piling additional pressure on the yuan.

“Those who want to convert their FX receipts into yuan are holding back and waiting for better prices,” said a trader at a foreign bank.

A second trader at a foreign bank said the weakness in the yuan was in line with trading in other currencies on Wednesday.

“Non-dollar currencies all crashed in early trades, the yuan can’t escape,” said the trader.

Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate at 7.1107 per dollar, the lowest level in over two years, and 385 pips or 0.54% weaker than the previous fix of 7.0722.

“The authorities have been seeking to slow the pace of depreciation through setting much stronger than expected fixings, but it is clear that there is no particular level that they are seeking to defend,” analysts at ANZ said in a note.

“Hence, in the face of further dollar strength, the authorities will ultimately allow the yuan to weaken further but will act to ensure any move is not disorderly.”

The declines come even as China’s central bank on Monday announced fresh steps to slow the pace of the yuan’s recent fall by making it more expensive to bet against the currency.

Earlier this month, the PBOC also cut the amount of foreign exchange reserves that financial institutions must hold in a move also seen as aimed at slowing the yuan’s depreciation.

China’s yuan hits 28-month low despite fresh policy step, nears daily down-limit

Efforts by authorities to stem yuan weakness were having a limited impact, said a third trader at a Chinese bank.

A source told Reuters late on Tuesday that Chinese monetary authorities are asking local banks to revive a yuan fixing tool it abandoned two years ago as they seek to steer and defend the rapidly weakening currency.

“We believe the CNY fixing guidance will remain the primary tool to support the RMB and, if necessary, the PBOC will freeze the CNY fixing to lock the USD/CNY spot at the 2% upper trading limit,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

“This will prove to be the least costly but effective policy to cap the USD/CNY spot,” Cheung said.

He expects the authorities could take more actions including verbal messages and window guidance to slow the pace of yuan depreciation.