The central parity rate of the Chinese currency renminbi, or the yuan, weakened 102 basis points to 6.3530 against the U.S. dollar Thursday, according to the China Foreign Exchange Trade System.
The U.S. dollar increased against most major currencies after the Federal Reserve at its latest policy meeting showed more confidence in the need to keep raising interest rates.
The possibility of faster hikes in U.S interest rates also lifted short-term U.S. Treasury yields to new high and boosted the dollar.
The weakening of the yuan was also a normal correction following its continued strengthening since the beginning of the year, analysts say.
The first month of 2018 saw the yuan's central parity rate gain more than 3 percent against the U.S. dollar, over half of the 5.81 percent gained for all of 2017.
Analysts predict that sound economic fundamentals will support the yuan in the long term and the rate will see more "two-way movement."
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.