China's yuan hit a record low against the surging U.S. dollar in offshore trading on Wednesday.

The offshore yuan – which is circulated outside the Chinese mainland and is more freely traded than currency in the domestic market – fell to around 7.2387 against the dollar on Wednesday.

That is its weakest level since clearing banks in Hong Kong were given the go-ahead to open renminbi accounts freely in 2010.

The U.S. Federal Reserve's increasingly hawkish tone and expectations of further interest rate hikes to fight soaring inflation have seen investors pile into the dollar, sending it to record or multi-decade peaks against other major currencies.

The onshore yuan, which is not freely convertible and limited to a two percent range on either side of a central parity rate set each day, also extended its slump to a 14-year low of around 7.2230 per dollar Wednesday.

China's central bank announced Monday that it would increase the foreign exchange risk reserve ratio for forward-forex sales from zero to 20 percent, effective from Wednesday.

(Source: AFP with edits; Cover photo via CFP)