Offshore Yuan Edges Higher

The offshore yuan edged higher to around 6.91 per dollar on Monday, trimming losses from the previous week despite subdued market sentiment amid escalating tensions in the Middle East. The US–Israel confrontation with Iran has thrown the region into turmoil, with the Strait of Hormuz, a key artery for global trade, effectively closed and threatened major energy facilities. However, China appears largely insulated from the crisis, holding substantial energy reserves and having invested heavily in alternative energy sources. Still, the yuan is expected to weaken in the near term, as ongoing conflict pushes oil prices higher and bolsters demand for the US dollar. On the trade front, Beijing has launched investigations into US trade practices in response to earlier probes by the Trump administration. This move follows the White House’s confirmation that Trump was scheduled to travel to China in mid-May for a long-awaited summit with President Xi Jinping.

The offshore yuan held losses around 6.91 per dollar on Friday, staying at its lowest level in nearly three weeks as market sentiment remained under pressure due to conflicting signals over potential de-escalation in the Middle East. In its latest development, US President Donald Trump announced he would extend a pause on attacks against Iran’s energy infrastructure into April, and described talks with Tehran as ‘going very well.’ However, an Iranian official dismissed a reported US proposal to end the conflict as “one-sided and unfair.” Losses in the yuan were partially cushioned by strong economic data from China. Profits at industrial firms soared 15.2% year-on-year to CNY 1.02 trillion in the first two months of 2026, marking a sharp rebound from just 0.6% growth in 2025. The figures point to improving momentum in China’s recovery, even as geopolitical tensions cloud the global outlook. Over the week, the yuan is set to post a weekly decline.

The offshore yuan fell to around 6.91 per dollar on Thursday, marking its third consecutive session of losses, tracking subdued global sentiment on conflicting signals regarding the de-escalation of Middle East tensions. Iran’s foreign minister said the country is reviewing a US proposal to end the war but has no plans to engage in direct talks to resolve the widening conflict. Trump recently sought support from major oil consumers, including China, to counter Tehran’s Strait of Hormuz closure. The call has largely gone unanswered, as China sees little benefit in intervening. Chinese and other non-hostile ships have reportedly continued transiting the strait, while the country’s strategic oil reserves and large green energy investments provide additional cushioning. Meanwhile, US President Donald Trump is scheduled to visit China in May for his first trip to the country in eight years, a closely watched journey that had been postponed due to the Iran crisis.