BEIJING -- The Chinese currency renminbi slumped on Wednesday, the first trading day of the Year of the Sheep, with the fluctuation approaching the 2-percent daily trading band.

The spot exchange rate of the yuan at one point weakened to 6.26 against the US dollar, marking a decline of 1.98 percent compared to the central parity rate of 6.1384 released by the authorities.

In China's spot foreign exchange market, the yuan is allowed to rise or fall by a maximum of 2 percent from the official rate each trading day.

Analysts believe the currency still faces remarkable downward pressure and will probably continue to depreciate in line with market expectation.

Guan Tao, head of the international payments department at the State Administration of Foreign Exchange (SAFE), has said that big fluctuations will be a major risk in 2015.

Although the yuan has weakened against the US dollar since the beginning of 2015, two-way fluctuation, instead of a continued depreciation, is the market consensus, Guan said.

The SAFE has vowed to speed up the yuan's convertibility under the capital account and maintain the "basic stability" of the currency while keeping its exchange rate at a "reasonable and balanced level".