China's currency fell to nearly eight-year lows against the dollar on Tuesday as a surge in the greenback continued to weigh on the yuan. The dollar was fetching as much as 6.8640 yuan during Asia trade on Tuesday, according to Reuters data, with at its weakest since at least January 2009, during the global financial crisis. That followed China's central bank, the People's Bank of China (PBOC), setting its daily fix at 6.8495 yuan against the dollar, compared with Monday's 6.8291 yuan. Tuesday's fix was the weakest for the yuan since 2008. Last year, China changed its market mechanism for setting the yuan's daily fix to be based on the previous day's close, theoretically allowing market forces to play a greater role in its direction. China's policy makers allow the yuan to move within a 2 percent band around the daily fix and fixings in the past had been a bit more arbitrary. Analysts pinned the move in the yuan to the U.S. dollar's rise in the wake of Donald Trump's surprise U.S. presidential election win last week. "It's really a U.S. dollar story at the moment," Roger Bridges, global rates and currencies strategist at Nikko Asset Management, told CNBC's "Street Signs" on Tuesday. He noted that on a trade-weighted basis, the yuan went up a bit. But he added, "given that I think the U.S. dollar has broken through the last December's highs, we could see further strength in the U.S. dollar and that could put further weakness onto the yuan, particularly against the U.S. dollar."

The , which measures the dollar against a basket of currencies, traded as high as 100.22 in U.S. trade on Monday, up from levels below 97 prior to the U.S. election. The dollar index rose as high as 100.51 in December 2015 as the U.S. Federal Reserve prepared to raise interest rates for the first time since 2006. Trump's plans to provide fiscal stimulus have led some analysts to anticipate an acceleration in inflation and spurred a rise in bond yields, which could continue to support demand for the greenback. On December 16, 2015, the Fed hiked rates by 25 basis points to a 0.25 percent to 0.5 percent range from a 0 percent to 0.25 percent range. Others also pointed to the moves in the dollar to explain the yuan's drop. Jason Daw, a strategist at Societe Generale, said in a note on Tuesday that the fix's sharp rise over the past two weeks was "wholly consistent" with the rise in the dollar index. "While the PBOC might prefer to slow the pace of depreciation, the dollar trend is a key factor in their decision process," Daw said. "Additionally, yuan trading volume remains elevated, which typically coincides with more capital outflows and yuan depreciation pressure." He expected the yuan could weaken to 7.10 against the dollar over the next year, compared with consensus forecasts for 6.90. Analysts widely expected that the Fed will hike by another 25 basis points at its upcoming December meeting.

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