TOKYO (Reuters) – China’s yuan tumbled more than 1% to 11-year lows on Monday amid mounting fears over a sharp escalation in the U.S.-China trade war, sparking a sell-off in other currencies in the region.

Growing anxiety over trade saw investors rush into perceived safe-haven assets, with the Japanese yen rising to a seven-month peak against the dollar.

The yuan unexpectedly broke through the closely watched 7 per dollar mark for the first time since the global financial crisis, a level some market players have regarded as major support. It fell to as low as 7.1137 per dollar CNH= in offshore trade and 7.0424 to the dollar CNY=CFXS onshore.

The move came just days after U.S. President Donald Trump surprised markets by saying he would impose more tariffs on Chinese imports.

“This could well be the biggest moment for the yuan this year. The impact of U.S.-China trade is turning out to be very big,” said Masashi Hashimoto, senior currency analyst at MUFG Bank.

The yuan last stood down 1.5% at 7.0839 offshore, and 1.3% at 7.0319 onshore. It was the first time the yuan traded above 7 per dollar since May 2008.

The sharp fall came after Beijing vowed on Friday to fight back against Trump’s abrupt decision to slap 10% tariffs on the remaining $300 billion in Chinese imports, a move that ended a month-long trade truce.

The slumping yuan knocked many currencies in the region.

The Australian dollar, often used as a proxy bet on China, shed 0.35% to $0.6773 AUD=D4, hitting a seven-month low of $0.6748. The currency wasn’t far off its Jan. 3 flash-crash low of $0.6715.

Emerging market currencies took a deeper hit.

The Korean won fell 1%, hitting a three-year low of 1,218.3 per dollar KRW=KFCT while the new Taiwan dollar fell more than 0.7% to a two-month low of 31.627 to dollar TWD=TP.

The Mexican peso fell 1% to 19.507 to the dollar MXN=D4 while the Indian rupee fell 1.2% to 70.425 per dollar INR=D4.

Domestic woes also added pressure on some currencies. Diplomatic tensions between Japan and Korea weakened the won, the Taiwan dollar softened after China restricted travel to the island and the rupee was rattled by instabilities in Kashmir.

“Until late last month, people have thought trade talks between the U.S. and China were going okay. But now we have tariffs that would hit the economy while the Fed wasn’t dovish last week. So it is a double-whammy for emerging currencies,” said Koichi Kobayashi, chief manager of forex at Mitsubishi Trust and Banking.

The U.S. dollar was on the back foot against traditional safe-haven currencies.

The dollar fell to as low as 105.80 yen JPY=EBS, its weakest since its January flash-crash, and last stood at 106.07 yen, down 0.5%.

Gold also hit a six-year high of $1,456.2 per ounce XAU= and last stood up 0.78% at $1,452.5.

The Swiss franc hit a two-year high against the euro, fetching 1.0890 franc per euro EURCHF=, having gained 1.4% over the past five sessions.

The common currency also rose 0.15% to $1.1122 EUR=EBS, extending its recovery from a two-year low of $1.1027 touched on Thursday, as U.S. bond yields have plunged, reducing the dollar’s yield attraction.

The 10-year U.S. Treasuries yield fell 7.5 basis points in Asia to 1.780% US10YT=RR, on top of last week’s 23 basis point fall, the biggest weekly fall in seven years.

Fed funds futures prices are now pricing in a total of 0.75 basis points by March, with some chance of a 50 basis point cut next month.

On Friday, the closely-watched U.S. employment data showed non-farm payrolls increased by 164,000 jobs in July, fewer than the prior month, and wages increased modestly.

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