You've got the correct size wheel on the bike. A 700c would work too, and give you some more room, but test fit them first to make sure your brake reach is long enough (The pads will have to be adjusted downward to work on the slightly smaller rims. Have you got a set of 700s you can try on it, or know where to borrow some?
Another way to get more room for a fender is run 27x1" tires. They're pretty skinny compared to what you have now, but they could make the difference.
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● 1971 Grandis SL ● 1972 Lambert Grand Prix frankenbike ● 1972 Raleigh Super Course fixie ● 1973 Nishiki Semi-Pro ● 1979 Motobecane Grand Jubile ●1980 Apollo "Legnano" ● 1984 Peugeot Vagabond ● 1985 Shogun Prairie Breaker ● 1986 Merckx Super Corsa ● 1987 Schwinn Tempo ● 1988 Schwinn Voyageur ● 1989 Bottechia Team ADR replica ● 1990 Cannondale ST600 ● 1993 Technium RT600 ● 1996 Kona Lava Dome ●