China's yuan edged up against the dollar on Monday, taking its cue from the US currency's weakness on global markets, and dealers said it was on track to rebound after softening over the past two weeks. The yuan ended at 8.0211 to the dollar versus Friday's close of 8.0250, after moving in a relatively wide range of 8.0205 to 8.0265.
"There are signs that the yuan will rebound in coming days, though it is expected to meet strong resistance at the key 8.0 level," said a dealer at a foreign bank.
Globally, the dollar eased against the yen and the euro on Monday as investors regained their appetite for risk after recent market jitters, but trade was thinned by public holidays in the United States and Britain.
The yuan's bounce on Monday came after the currency had weakened by 0.35 percent versus the dollar since May 15, when it briefly broke through 8.0000 to hit 7.9972 in intraday trade, its strongest level in a dozen years.
The recent slide was the longest period of weakness and the steepest fall for the yuan since Beijing revalued the currency by 2.1 percent and freed it from a dollar peg in July last year.
"The yuan's latest weakening has been against market expectations," said a dealer at a Chinese commercial bank. "But we now see it regaining some ground to head for the 8.0 level in coming weeks." Technical players will be keen to buy the yuan now that it appears to have bottomed, other traders said.
Many traders suspect the central bank helped to engineer the recent yuan weakness, perhaps as a warning to the market against excessive speculation about yuan appreciation. Beijing has cut direct intervention in yuan trade since the July policy change, but has maintained its influence through trading by state banks.