Offshore Yuan Slips on Stronger Dollar

The offshore yuan held around 6.69 per dollar on Friday, remaining at its strongest level since July 2022 as China accelerates efforts to establish the currency as a global player. Beijing is broadening the range of available investment products and financial instruments, including derivatives and hedging tools, while easing access to dim sum and panda bond issuance. Progress also includes expanding offshore-yuan investment options, deepening yuan-based financing, and strengthening cross-border clearing and settlement infrastructure. Meanwhile, caution lingered over persistent China-EU trade tensions as the bloc considers new powers to restrict access to its single market and assesses import data for potential surges, a preliminary step toward imposing quotas on additional goods. China has warned of retaliation against any new EU trade measures or discriminatory restrictions targeting Chinese companies or products beyond the hybrid vehicle export cap agreed last week.

The offshore yuan strengthened to around 6.69 per dollar on Thursday, lingering near its strongest level since July 2022 even as the IMF said China’s stimulus efforts were insufficient and flagged the currency’s undervaluation. Beijing has introduced mortgage subsidies and expanded central bank support for targeted sectors, while the State Council pledged to roll out “a package of practical and effective additional policies” to meet this year’s economic goals. However, the IMF has called for more ambitious measures, estimating that the yuan is undervalued in real terms by 17.3% to 25.3% in 2026, with a midpoint of 21.3%. China’s currency valuation has become a flashpoint in global trade discussions, with debate centering on whether it drives trade imbalances or reflects broader economic conditions. The PBoC argued that the IMF’s assessment does not constitute a judgment on the yuan’s nominal exchange rate or justify calls for a deliberate appreciation against specific currencies.

The offshore yuan traded around 6.69 per dollar on Wednesday, trading near its storngest level since July 2022 as strong external demand continued to support China’s economic outlook. China’s trade surplus widened to $133.53 billion in September 2026 from $88.72 billion a year earlier, marking its largest surplus since January 2025. Exports surged 36.3% year-on-year to a record $447.18 billion while imports climbed 31.0% to a record $313.66 billion. China’s trade surplus totaled to $938 billion in the first nine months of the year, putting it on track to reach $1 trillion. Meanwhile, annual consumer inflation edged up to a three-month high of 0.9% in September from 0.8% in August. Producer price inflation climbed to 5.0% from 3.8%, marking the strongest rise since June 2022. Renewed Middle East hostilities and risks to global oil supplies have added to cost pressures, squeezing corporate margins as businesses struggle to pass higher input costs on to consumers.