China's central bank has firmly rejected the U.S. Treasury's designation of Beijing as a currency manipulator, saying the accusation has "seriously" undermined the international financial order and risked further market turmoil.

The response from the People's Bank of China comes at a time of rapidly intensifying trade tensions between the world's two largest economies.

On Monday, the U.S. Treasury accused Beijing of deliberately influencing the exchange rate between the yuan and the U.S. dollar to gain an "unfair competitive advantage in international trade."

The move fulfills President Donald Trump's promise to recognize China as a currency manipulator for the first time since 1994.

The announcement followed a sharp drop in the yuan against the dollar, with the Chinese currency breaching the 7-per-dollar level for the first time since 2008. A drop in a currency's value makes that country's products cheaper on the international market.

"The United States disregards the facts and unreasonably affixes China with the label of 'currency manipulators,' which is a behavior that harms others and oneself," the PBOC said in a statement on Tuesday. "The Chinese side firmly opposes this."

The PBOC said it would not only "seriously undermine the international financial order, but also trigger financial market turmoil. It will also greatly hinder international trade and the global economic recovery, and ultimately will suffer from it."

China's central bank set the yuan's official reference point at stronger than the key 7 yuan-to-the-dollar point on Tuesday.

The move appeared to calm financial markets, initially rocked by fears the U.S.-China trade war was devolving into a currency war.

Late last week, China promised to fight back after Trump vowed to impose 10% tariffs on the remaining $300 billion worth of Chinese imports that had not been hit with U.S. duties.