SHANGHAI: China’s yuan had a catch-up rally and surged to a six-week high against the dollar on Monday, the first trading day after the long Labor Day holiday, as the central bank set a much strengthened midpoint fixing to track offshore movements.

While mainland China’s markets were closed for three days last week, the offshore yuan had risen on the back of the dollar’s broad retreat after data showed a cooling US jobs market, Federal Reserve Chair Jerome Powell confirmed the central bank’s easing bias and suspected Japanese government interventions pushed the yen higher. The offshore yuan was last at 7.2185 per dollar, after gaining more than 1% last week.

“Japan’s intervention should have a larger impact on the yuan as an additional source of stability in the region, which eases the pressure on the CNY trade weighted index (TWI), in the near term,” analysts at Goldman Sachs said in a note.