SHANGHAI - China's yuan slid to a four-month low on Thursday, as jitters increased ahead of pivotal U.S.-China trade talks in Washington likely to impact the global economy.
Spot yuan breached the psychologically critical 6.8 level and was on track for a sixth straight loss.
Onshore yuan opened at 6.7905 per dollar and was changing hands at 6.8087 at midday. That was 256 pips lower than Wednesday's late session close of 6.7831, and 0.62 percent weaker than Thursday's official midpoint of 6.7665, the weakest in nearly three months.
U.S. President Donald Trump said on Wednesday that China "broke the deal" reached in trade talks with the United States, and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing "stops cheating our workers."
The U.S. Trade Representative's office announced that tariffs on $200 billion worth of Chinese goods would increase to 25 percent from 10 percent at 12:01 a.m. (0401) GMT on Friday, right in the middle of two days of meetings between Chinese Vice Premier Liu He and Trump's top trade officials in Washington.
Beijing has announced it will retaliate if U.S. tariffs rise.
ING said that while the chance is small that U.S.-China trade relations are not back on track by Friday morning, "the imposition of higher US tariffs (even for the short term) would un-nerve global FX markets."
Philip Wee, FX strategist at DBS Group, said in a note "If talks break down and most exports from China to the US face 25 percent tariff from this Friday onward, risks of a financial market collapse, extreme risk aversion, and sharp slowdown in global growth will spike."
The yuan was not helped by data showing China's factory-gate inflation hit a 4-month high, as worries remained about the state of demand factors in the economy.
China's risky assets remained under pressure, with the benchmark Shanghai index plumbing an 11-week low by the lunchbreak.
The global dollar index fell to 97.615 from the previous close of 97.623.
The offshore yuan was trading at 6.8315 per dollar, 0.31 percent lower than the onshore spot.