China's yuan eased against the dollar on Monday for a fourth consecutive session, consolidating after a rally through the key 7.60 mark early last week, with dealers predicting a further correction. The yuan ended trade at 7.6015 to the dollar, slightly below Friday's finish at 7.6010.
Before the start of trade, the People's Bank of China fixed the yuan's daily mid-point at 7.6085 to the dollar, up from 7.6135 on Friday. Despite Monday's higher mid-point, dealers expected the yuan would continue its pull-back in the short term, weighed down in part by a recovery in the dollar on global markets.
"The yuan will stay around 7.6000 or even 7.6100 in the short term, due to a possible technical rebound in the US dollar. The central bank also wants to slow down the fast pace of appreciation since last month," said a dealer at a major Chinese commercial bank.
The yuan broke through the key 7.6000 level last Tuesday for the first time and hit an intraday high of 7.5929 to the dollar, its highest trading level since Beijing revalued the yuan and depegged it from the dollar in July 2005. Traders said the latest correction did not herald a change to the yuan's long-term upward trend.
The yuan has appreciated 6.67 percent since its revaluation, but many United States lawmakers have said it remains seriously undervalued and gives China an unfair advantage in international trade. Assistant governor of the People's Bank of China Yi Gang said last Saturday that the Chinese currency would gradually become more flexible but would be managed in a rational and balanced manner.
One-year offshore non-deliverable forwards (NDFs) quoted the yuan at 7.2560/7.2600 at 0936 GMT, indicating appreciation of 4.8 to 4.86 percent in a year's time from Monday's mid-point, up from 4.72 to 4.79 percent on Friday.
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