Yuan extends decline amid policy hopes

China's yuan extended a decline from the lowest level in more than two years amid speculation the government will take further steps to support the economy after cutting interest rates for the second time in three months.

The People's Bank of China may lower borrowing costs before May and reduce the ratio of deposits that lenders must set aside, according to the Industrial and Commercial Bank of China Ltd and China Merchants Bank Co Ltd.

"The yuan is becoming less and less attractive compared with the dollar," said Xiang Chu, a Shanghai-based foreign-exchange analyst at Industrial Bank Co. "Investors are expecting the government to announce more easing policies, which will lead to further yuan depreciation. And that is encouraging them to sell the yuan."