Donald Trump's victory led to the Chinese yuan plunging to a six-year low. The fall is due to concerns about Trump's protectionist trade policies. The Chinese yuan seems to be heading for its third annual loss. The currency is down 4.4 percent this year.

Trump's presidency is likely to put a strain on the economic ties between China and the US. During the election campaign, Trump accused China of currency manipulation. He may also proceed to impose punitive duties on Chinese exports to the US.

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Christy Tan, head of markets strategy in Hong Kong at National Australia Bank Ltd., said, "Trump has made his stance quite clear about China and it is definitely not a friendly outcome in terms of bilateral trade relations." 

The offshore yuan hit a new six-year low on Wednesday as it breached the  6.8 per dollar level in the early trade. However, later in the session, the currency stabilized on account of the declining dollar.

China sets a daily reference rate for its currency. This reference rate defines the yuan's trading in the secondary market. The rate is determined using its previous closing price and the movement shown by a basket of currencies. This implies that the decline of the yuan is partially attributed to the weakness shown by other currencies vis-à-vis dollar.

The markets are expected to keep a keen eye on US politics. Trump had threatened to levy duties as high as 45 percent on Chinese imports. The Commonwealth Bank of Australia believes that the move may cause up to 25 percent decline in Chinese shipment to the US, furthering straining the yuan's value.  

Tagsdonald trump, yuan, Commonwealth Bank of Australia