China's yuan rose against the dollar on Monday as the US currency tumbled in overseas markets amid global credit market turmoil. The yuan closed at 7.5610 to the dollar, up from Friday's 7.5680, after touching an intraday peak of 7.5563 in the morning - its highest in nearly two weeks.
Before the market opened on Monday, the People's Bank of China fixed its daily mid-point at 7.5598 to the dollar, stronger than Friday's mid-point of 7.5683. "The renminbi is rising today because of US dollar weakness in the international market. It is likely to continue appreciating against the dollar this week and will have a chance to test the 7.54 level," said a dealer at a Chinese bank.
"It is believed that the dollar weakness will persist for a while," he added. Fears of a global credit squeeze and worries about US economic strength swept across overseas financial markets on Monday, shaking up stocks, knocking the dollar to a 15-year low and straining popular currency trades.
The dealer said the yuan was also poised for a technical rebound after fluctuating within a 7.56 to 7.58 range for about a week. One-year offshore non-deliverable forwards quoted the yuan at 7.1460/7.1500, indicating appreciation of 5.73 to 5.79 percent in a year's time from Monday's mid-point.
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