Chinese policy makers had it easier earlier in the year, when fading bets for higher U.S. interest rates spurred a weaker dollar. By allowing the yuan to rise less against the greenback than its peers, the CFETS RMB Index of 13 trade partners' currencies fell steadily without causing alarm. While the gauge is still down 6.2% this year, it's remained above its two-year low of around 94 since Aug. 23.

The risks of a faster depreciation were laid bare in August last year, when policy makers unexpectedly devalued the currency. After a more than 50% surge in the real effective exchange rate over the past decade, there was a compelling case to weaken the yuan. The result, however, was panic across global markets and record capital outflows, which prompted the government to deplete its foreign-exchange reserves to stabilize the exchange rate and tighten controls on outflows.

The yuan fell 0.2% to 6.73 per dollar at 5:01 p.m. in Shanghai, while dropping 0.1% against the trade-weighted index.

Fiona Lim, a senior currency strategist at Malayan Banking Bhd. in Singapore, says 94 could be the currency basket's low for now, with a slowdown in exports in other countries suggesting a weaker yuan may not be of much help.

“Exports remained sub-par for China and for most other parts of the world,” she said. “Hence, the benefits of depreciating the yuan on a trade-weighted basis is small and would be largely outweighed by a potential rise in capital outflows should markets expect the yuan to weaken substantially.”

Still, the slide in exports will add to pressure for policy makers to allow quicker depreciation, said Deutsche's Kojodjojo.

“Given the weaker data, China is likely to try to correct some of the renminbi over-valuation,” he said, using an alternative name for the currency.

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