China's yuan hit a five-month low against the dollar as surging US inflation delayed expectations of a Federal Reserve rate cut.

Despite central bank efforts, the yuan traded at 7.2361 per dollar, down 1.9% this year due to low yields and foreign investment outflows.

The People's Bank of China set the midpoint rate at 7.0968 per dollar, the largest deviation from estimates since 2018. The yuan can trade within a 2% band of this official fixing.

The dollar's strength, driven by higher-than-expected US inflation, contributed to the yuan's decline, while China's cooling consumer inflation added pressure.