The yuan extended its strong momentum of appreciation yesterday, breaking the 7.2 mark against the US dollar, another post-revaluation high.

The central parity rate of the yuan was 7.1996 against one dollar, the fourth straight post-revaluation record. Dealers said it was mainly because of the expected cut in the US interest rates and the domestic inflation pressure.

The US Federal Reserve is expected to cut interest rates again this week following last week's 75-basis-point emergency cut. It will be harder for China to raise its interest rates to curb inflation because opposite interest rate movements between the yuan and the dollar may usher in more speculative capital into the domestic market.