Chinese Yuan Hits 3-year High

The offshore yuan strengthened to around 6.79 per dollar on Thursday, extending its rally for a third straight session and reaching its strongest level since February 2023, as risk sentiment firmed amid growing optimism over a potential diplomatic breakthrough between Washington and Tehran. Reports indicated that the US and Iran are close to finalizing a one-page memorandum designed to halt weeks of hostilities, paving the way for the reopening of the Strait of Hormuz, easing disruptions to oil flows, and improving global growth prospects. Investors are also watching a highly anticipated summit next week between Trump and Chinese President Xi Jinping, previously postponed amid heightened geopolitical tensions tied to the Middle East war. Meanwhile, China’s financial regulator reportedly told major lenders to suspend new financing to five refineries sanctioned by the US over alleged Iranian oil ties, contrasting with earlier guidance from Beijing urging firms to ignore US sanctions.

The Chinese Yuan touched 6.81 against the USD, the highest since February 2023. Over the past 4 weeks, US Dollar Chinese Yuan lost 0.39%, and in the last 12 months, it decreased 6.02%.

The offshore yuan strengthened to around 6.81 per dollar on Wednesday, reaching its strongest level since February 2023, as demand for safe-haven assets such as the US dollar weakened amid diplomatic progress between the US and Iran. Market sentiment improved after President Donald Trump pointed to what he described as “great progress” toward a “complete and final agreement with representatives of Iran,” while stating that the US would temporarily pause efforts to assist stranded vessels leaving the Strait of Hormuz. In parallel, Trump indicated he would discuss the Iran conflict with Chinese President Xi Jinping during their upcoming summit on May 14–15, while seeking to temper tensions surrounding the issue. On the domestic front, a private survey showed that the composite PMI rose to 53.1 in April from 51.5 in March, as both manufacturing output (52.2 vs. 50.8) and services activity (52.6 vs. 52.1) expanded at a faster pace.