As the Chinese yuan succumbs to further selling pressure against the U.S. dollar, concerns over China's slowing growth and speculation that Chinese authorities will devalue the currency to support growth, analysts are questioning how low it will go.
"We have been anticipating some RMB weakness versus the USD since the end of 2014. This, however, is happening faster than expected due to aggressive ECB (European Central Bank) QE (Quantitative Easing) and a sharp drop in the EUR," said Paul Mackel, head of Asian FX Research at HSBC.
He noted the yuan is very sensitive to euro because of both the design of the People's Bank of China's (PBoC) fix as well as close trade links with the EU.
For the yuan, there is "little light at the end of the tunnel" right now, he said.
The Chinese currency has fallen 1 percent against the U.S. dollar this year, extending the slide that began last November. Since November, it has depreciated 2.4 percent.