BENGALURU - The Chinese yuan will weaken further beyond the current 7 per dollar rate over the coming year as Beijing steps back from managing the currency amid tariff threats from Washington, a Reuters poll of foreign exchange strategists showed.

Having protected it since the global financial crisis, Chinese authorities let the yuan breach the key psychological 7 per dollar rate last week.

That came after U.S. President Donald Trump imposed an additional 10% tariff on the remaining $300 billion worth of Chinese imports and as Washington called China a currency manipulator for the first time in 25 years.

Since then, China's central bank has consistently set the yuan's daily mid-point reference rate above 7 to the dollar, only allowing it to move in a 2% range, weakening the currency to over an 11-year low of 7.0689 per dollar on Monday.

The poll, taken after those developments, predicted the yuan would weaken about 1% to 7.10 per dollar by end-October. It is then forecast to gain slightly to 7.06 in a year, close to where it was trading on Tuesday.

That is a complete U-turn in expectations from a survey taken last week when the yuan was forecast to have risen over 2% in a year, with the most optimistic call pencilled in for an 11% gain. 

"We think it is unlikely that the USD/CNY will fall below 7 unless upcoming trade talks go particularly well, which is not our base case," said Iris Pang, Greater China economist at ING, who was second most accurate forecaster in Reuters polls for Asian currencies in 2018.

"The USD/CNY passing 7 shows that China is going to fight this trade war hard, at least while President Trump is in office."

The year ahead outlook for the renminbi in the latest survey was the most downbeat median in Reuters polls since June 2017. The most pessimistic forecast in the latest poll was 7.75 by Rabobank, a rate not seen since early 2007.

"In an environment which is going to be globally far more uncertain where China is growing much more slowly, you have more than a trade war - basically a Cold War between the two. It strikes me that you will end up having a massive depreciation in the renminbi," said Michael Every, Hong Kong-based senior Asia-Pacific strategist at Rabobank.

"Fundamentally, I do not see any way that you are going to get a clear trade deal that would last between the U.S. and China. We have got decades' and decades' worth of instability on that front ahead of us."

Rabobank's Every forecasts the yuan to depreciate around 20-25% to 8.5 or more against the greenback in the next two years.

A weaker yuan also raised risks of capital outflows, something China has been able to keep under control over the past year.

Additionally, a weak economic growth outlook and expectations of more policy easing by the People's Bank of China will exert further pressure on the yuan. 

"China has probably determined that striking a deal with the U.S. is unlikely and it is time to allow the renminbi to fall to reflect fundamentals (weaker growth) and to dig in for a long-term stalemate," said Jason Daw, head of emerging markets strategy at Societe Generale, the most accurate forecaster for Asian currencies last year.

(Polling by Shaloo Shrivastava in Bengaluru and Jing Wang in Shanghai; Editing by Sam Holmes) ((vivek.mishra@thomsonreuters.com ; +91 80 67499725; Twitter: https://twitter.com/Reuters_Vivek))