The yuan dropped toward a two-month low on Thursday on concerns the US will scale back an asset-buying program that has been fueling fund flows into emerging markets.

Several Federal Reserve policy makers said the central bank should be ready to vary the pace of its $85 billion of monthly bond purchases, minutes of a Jan 29-30 meeting released on Wednesday showed.

The Dollar Index rose 0.75 percent on Wednesday, the most since July. The People's Bank of China cut the daily yuan fixing by 0.07 percent to 6.2846 per dollar on Thursday