SHANGHAI, Sept 22 (Reuters) - China's yuan fell to a 27-month low against a surging dollar in early trade on Thursday, as the Federal Reserve delivered another 75-basis-point interest rate rise and signalled more hikes in coming months.

Fed Chair Jerome Powell vowed on Wednesday that he and his fellow policymakers would "keep at" their battle to beat down inflation. In a sobering new set of projections, the Fed foresees its policy rate rising at a faster pace and to a higher level than expected.

The Fed's more hawkish stance than many market participants had anticipated lifted the dollar to a fresh two-decade high and pressured emerging market currencies.

Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.9798 per dollar, 262 pips or 0.38% weaker than the previous fix of 6.9536, the softest since Aug. 4, 2020.

But the official guidance came in much stronger than market projections for the 21th straight trading day, traders and analysts said, noting this was part of an official attempt to stem fast yuan declines. Thursday's midpoint was 148 firmer than Reuters' estimate of 6.9946.

"The dollar was too strong," said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

"This round of yuan depreciation was triggered by the buoyant dollar, and the midpoint fixing should remain the key tool (to stabilise the market)."

In the spot market, the onshore yuan opened at 7.0801 per dollar and fell a low of 7.0953, the weakest level since June 17, 2020. It traded at 7.0938 as of 0230 GMT, 461 pips softer than the previous late session close.

Its offshore counterpart breached the key 7.1 per dollar level before trading at 7.1002 around 0230 GMT.

Some currency traders said the 7.1 per dollar should continue to offer strong resistance to the onshore market, as it was not far from the lower end of the daily trading band of 7.1194.

China's onshore yuan can only trade in a narrow range of 2% around the daily midpoint fixing, and Thursday's guidance rate capped the range to between 6.8402 and 7.1194.

"The hard defense line could be around 7.18 per dollar for this round of depreciation," said a trader at a foreign bank.

The trader said the level was last hit during the height of Sino-U.S. trade tensions in 2019 and has also acted as a floor for the yuan since the global financial crisis of 2008.

(Reporting by Winni Zhou and Brenda Goh; Editing by Ana Nicolaci da Costa)