Chinese Yuan Hits 34-month High

The offshore yuan strengthened to around 6.83 per dollar on Thursday, extending its rally to a fourth straight session and reaching a new high since April 2023, as the greenback remained on the back foot. The US dollar stayed under pressure amid lingering uncertainty over Washington’s tariff policies, which has weighed on confidence in the world’s primary reserve currency. Adding to the cautious market mood, US and Iranian negotiators were set to meet in Geneva later in the day for another round of nuclear talks, an event closely watched by global investors. The yuan’s advance came despite a markedly weaker-than-expected official fixing, seen as an effort to temper the currency’s rapid appreciation. The People's Bank of China set the midpoint rate at 6.9228 per dollar, 623 pips weaker than Reuters’ estimate and the largest deviation on record. Investors are now turning their attention to next week's PMI data, which could provide insights into the strength of China’s economic health.

The Chinese Yuan touched 6.85 against the USD, the highest since April 2023. Over the past 4 weeks, US Dollar Chinese Yuan lost 1.18%, and in the last 12 months, it decreased 6.16%.

The offshore yuan strengthened to around 6.86 per dollar on Wednesday, hitting its strongest level since April 2023, as a weakening greenback supported the currency. The US dollar declined amid uncertainty over US tariffs and fiscal policies, compounded by investor caution amid US President Donald Trump’s State of the Union address. The yuan gained further support as Indonesia began marketing offshore yuan-denominated bonds, testing global investor appetite amid concerns over the nation’s fiscal health. This is Indonesia’s second offshore yuan issuance, following its October debut, reflecting its strategy to take advantage of China’s low borrowing costs. On the monetary policy front, the People's Bank of China recently held its key rates unchanged for the ninth consecutive month, with the one-year and five-year loan prime rates at 3.0% and 3.5%, respectively.