China's yuan rose against the dollar on Monday as the U.S. currency tumbled in overseas markets amid global credit market turmoil.

The yuan closed at 7.5610 to the dollar, up from Friday's 7.5680, after touching an intraday peak of 7.5563 in the morning -- its highest in nearly two weeks.

Before the market opened on Monday, the People's Bank of China fixed its daily mid-point at 7.5598 to the dollar, stronger than Friday's mid-point of 7.5683.

"The renminbi is rising today because of U.S. dollar weakness in the international market. It is likely to continue appreciating against the dollar this week and will have a chance to test the 7.54 level," said a dealer at a Chinese bank.

"It is believed that the dollar weakness will persist for a while," he added.

Fears of a global credit squeeze and worries about U.S. economic strength swept across overseas financial markets on Monday, shaking up stocks, knocking the dollar to a 15-year low and straining popular currency trades.

The dealer said the yuan was also poised for a technical rebound after fluctuating within a 7.56 to 7.58 range for about a week.

One-year offshore non-deliverable forwards quoted the yuan at 7.1460/7.1500 at 1016 GMT, indicating appreciation of 5.73 to 5.79 percent in a year's time from Monday's mid-point.

That was actually slightly less than the 5.87-5.94 percent appreciation indicated by NDFs late on Friday.

The possibility of a rapid appreciation in the yuan can still be ruled out for the short term, dealers say.

A recent round of global interest rate hikes will help to curb speculative funds from flowing into China and relieve pressure on the yuan to appreciate, according to a commentary in the China Securities Journal on Monday.

Despite a 0.552 percent appreciation of the yuan against the U.S. dollar in July, the Chinese currency depreciated 0.616 percent against a package of major global currencies including the euro and pound, the newspaper said, citing a report by the Bank for International Settlements.