Offshore Yuan Trades Near Record Low as PBOC Seen Allowing Drop

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The Chinese currency has come under increased pressure on signs that investors are taking more money out of the country. A gauge of the dollar rose to a seven-month high versus major currencies Monday as traders bet that the Federal Reserve may raise borrowing costs soon. Unlike the yuan selloff earlier this year which sparked a global market rout, there's no sense of panic yet as policy makers maintain a steady exchange rate against other currencies.

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"The central bank is tolerating more orderly depreciation of the yuan," said Gao Qi, a Singapore-based foreign-exchange strategist at Scotiabank. "But it will step in to avoid market panic arising from a sharp yuan depreciation. The 6.8 level is critical in the near term."