China's yuan dips as tariff fears hurt sentiment

HONG KONG, Feb 27 (Reuters) - China's yuan slipped against the U.S. dollar on Thursday as investors remain cautious amid uncertainty over U.S. tariffs and broader economic policies under the Trump administration.

By 04:35 GMT, the yuan CNY=CFXS was 0.15% down at 7.2690 to the dollar after trading in a range of 7.2590 to 7.2699, having earlier hit lowest level in one week.

Its offshore counterpart CNH=D3 traded at 7.2749, down about 0.11% in Asian trade.

Sentiment over the Chinese currency continues to be undermined by the uncertainty surrounding U.S. President Donald Trump's tariffs threats.

"The potential risk of the U.S. imposing additional tariffs on China remains a major risk factor for the renminbi (yuan) exchange rate, it is possible the tariff risks will further intensify," said Ming Ming, chief economist at CITIC Securities.

Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC, around which the yuan is allowed to trade in a 2% band, at 7.1740 per dollar, its weakest since January 20 and 821 pips firmer than a Reuters' estimate.

The spot yuan has lost over 2% to the dollar since Trump's election win in November amid heightening Sino-U.S. tensions.

In overnight trade, the dollar rose to move further from recent 11-week lows, as investors assessed the strength of the economy and tariffs prospects after the most recent comments from the Trump administration.

That volatility in dollar and the potential pause on U.S. rate cuts added to trader's worries over the yuan.

To curb any sizable capital outflow, Chinese authorities are rolling out fresh measures, including increased scrutiny of overseas investments, to support the local currency.

"Once the currency stabilizes at a weaker level, the PBOC could cut policy rates to ease policy and facilitate fiscal stimulus," Hui Shan, chief China economist at Goldman Sachs, said in a note.

LEVELS AT 0434 GMT