China's yuan set a record closing high against the dollar on Tuesday, taking advantage of the US currency's slide against the euro, dealers said. They also said the yuan would likely extend its upward momentum later this week after hovering near 7.6450 to the dollar for a few sessions. "What we saw today was a breakthrough," said a dealer at a Chinese bank.
The yuan ended at 7.6412 to the dollar on Tuesday, versus 7.6512 at Monday's close, after China's central bank set the currency's mid-point on Tuesday at 7.6427, the highest since its July 2005 revaluation. "Today's mid-point was set at a high level because other currencies such as the euro have performed well against the dollar," the dealer said.
The yuan hit an intraday high of 7.6411 to the dollar on Tuesday, its highest since Beijing revalued the currency and abolished its peg to the dollar in July 2005. A dealer at a US bank in Shanghai also linked the yuan's strength to the dollar's weakness on Monday, and said the yuan would continue to gain steadily.
Traders said the more than 2 percent rebound in the Shanghai stock market on Tuesday had little impact on the currency market, although an 8.26 percent tumble the previous day raised concerns that a stock market rout could dampen sentiment toward China's markets and economy. Dealers have said there were no direct links between China's stock market, where foreign participation is limited, and its foreign exchange market.