The Chinese yuan plunged to a five-year low in offshore trading and the gap between it and its mainland counterpart widened sharply on Wednesday, reflecting growing expectations of further weakness in the currency as China's economy slows and capital outflows accelerate amid a stock slump.

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The offshore yuan slumped to 6.6650 against the dollar, the lowest rate since the last quarter of 2010. The onshore yuan rate was 6.5418 against the dollar.

The latest trigger for the slump came after the People's Bank of China (PBOC) set the official dollar/yuan midpoint rate at 6.5314, the weakest fixing since 2011. The fix represented a 0.22 percent decline from the previous session, a faster pace than witnessed recently.

While the yuan is primarily traded on the mainland and is subject to strict central bank supervision, its offshore counterpart is accessible to everyone.

Created in the early 2000s, the offshore yuan allows foreigners to settle trade and transactions in the currency, enabling Beijing to maintain a presence on the global finance stage while still allowing the government control over the country's capital account.

The offshore rate also moves more freely than its tightly-controlled onshore counterpart, which is only allowed to rise or fall a maximum of 2 percent against the dollar relative to the official fixing rate.