China's yuan eased against the dollar on Monday after finishing last week at a post-revaluation closing high, taking its cue again from the US currency's strength on international markets.
The yuan, which was revalued by 2.1 percent on July 21 to 8.11 per dollar, closed at 8.0845 to the dollar, versus 8.0840 on Friday. It has now appreciated a further 0.31 percent since the July policy move.
"The strength of the dollar has played a big part in the yuan's softness today," said a dealer with a major foreign bank.
Globally, the dollar traded in a narrow range on Monday after advancing on Friday on stronger-than-expected US economic growth data - which in turn lent credence to expectations that the Fed would keep raising interest rates.
The Chinese currency firmed against the euro to close at 9.7469 compared with 9.8256 on Friday, and strengthened to 6.9826 per 100 yen from 7.0197, the central bank said on its Web site (www.pbc.gov.cn).
It took the yuan, also known as the renminbi, more than three months to rise 0.3 percent, or the daily limit set for the currency to rise or fall as laid out during the July 21 revaluation.
Dealers expected the yuan's slide against the dollar to continue in coming days should the greenback hold steady. "It could easily hit the 8.0860 level soon, if that was the case," said another Shanghai-based dealer. Over the longer term, however, a gradual and upward movement was inevitable, given China's strong economy and strong capital inflows, economists say.
One-year onshore yuan forwards were quoted at 7.8320 to the dollar on Monday, indicating the market believes the yuan would be 3.1 percent firmer in a year's time.
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