China's currency hit lows not seen since last July, and the gap between onshore and offshore rates widened, suggesting greater pessimism among foreign traders. The yuan has been hurt by a worsening trade conflict between the U.S. and China, and expectations that Beijing will ease monetary policy, while the Federal Reserve is likely to keep raising U.S. borrowing costs. On Thursday morning, the People's Bank of China set the dollar's daily reference rate at 6.7066 yuan, weakening the yuan by 0.2%. The central bank allows the currency pair to move as much as 2% above or below that level onshore, while trading in other financial centers is unrestricted. In subsequent trading, the currency fell as much as 0.6% to 6.7534 per dollar in the mainland, and by a similar proportion in the Hong Kong offshore market to 6.7861 per dollar, both levels not seen since July 2017. A month ago, the two rates were nearly identical, but now the offshore yuan buys roughly 0.5% fewer dollars than its counterpart. The increasing gulf indicates overseas institutions are more bearish than peers within mainland China.via