Offshore Yuan Steady

The offshore yuan steadied around 6.72 per dollar on Thursday after retreating in the previous session, as fresh industrial profit data strengthened expectations that Beijing could unveil additional policy support to bolster growth. China's industrial profits rose 17.6% year-on-year to CNY 4.58 trillion in the first seven months of 2026, easing from an 18.7% increase in the January–June period. The slowdown points to growing pressure on corporate profitability amid subdued domestic demand and fading support from earlier oil price gains, adding to concerns over the broader economic outlook after July figures showed industrial output, retail sales, and fixed-asset investment all missed expectations. Against this backdrop, investors are closely watching the National People’s Congress Standing Committee meeting, which concludes on August 28, for potential policy support aimed at supporting growth.

The offshore yuan weakened to around 6.72 per dollar on Wednesday, reversing gains from the previous month, weighed down by a softer-than-expected official fixing. The People’s Bank of China set the yuan’s midpoint at 6.7829 per dollar, 663 pips below the Reuters estimate and marking its largest negative deviation since February. The weaker-than-expected fixing extended a trend seen since November 2025, underscoring the central bank’s efforts to temper the yuan’s recent appreciation while maintaining stability in the currency market. Investors remained focused on escalating US-Iran tensions after Washington expanded sanctions on Iran. Attention also turned to the National People’s Congress Standing Committee meeting, scheduled for August 25–28, with investors looking for fresh policy guidance after a run of disappointing economic data and recent commitments by authorities to bolster growth.

The offshore yuan strengthened to around 6.72 per dollar on Friday, marking its third straight session of gains and reaching its strongest level since January 2023, as persistent weakness in the US dollar continued to support the currency. The greenback remained under pressure as expectations for further Fed rate hikes eased, while the announcement of expanded bond buybacks boosted demand for longer-dated Treasuries and weighed on the dollar. On the monetary policy front, the central bank kept its benchmark lending rates unchanged at record lows for a fifteenth consecutive month. The one-year loan prime rate (LPR) was held at 3%, while the five-year LPR remained at 3.5%, reflecting policymakers' cautious approach amid lingering domestic and external uncertainties. Attention is now turning to the National People's Congress Standing Committee meeting in Beijing on August 25–28, where investors hope for additional policy guidance following a string of weak economic data releases for July.