Offshore Yuan Hits 1-Month High

The offshore yuan traded around 6.76 per dollar on Tuesday, reaching its strongest level in a month, supported by firmer official guidance from the People's Bank of China. The central bank set the daily midpoint rate at 6.7917 per dollar, 31 pips stronger than the previous fixing of 6.7948. The latest move signaled continued support for the currency, even as geopolitical tensions in the Middle East boosted demand for the US dollar as a safe-haven asset. Providing additional support, the State Council emphasized accelerating policy implementation and improving the efficiency of fiscal spending, underscoring its commitment to bolstering growth after Q2 GDP slowed to 4.3%, the weakest pace in more than three years and well below Beijing's annual target range of 4.5% to 5%. Investor focus is now turning to the Communist Party of China's upcoming Politburo meeting later this month for signals on the economic policy agenda for the second half of the year.

The offshore yuan hovered around 6.77 per dollar on Monday, remaining near a one-week low as investors weighed escalating tensions in the Middle East and the People's Bank of China's decision to leave key lending rates unchanged. Sentiment remained fragile after the US launched fresh airstrikes against Iran over the weekend, while Tehran declared its ceasefire with Washington no longer in effect. On the monetary policy front, the People's Bank of China left its key lending rates unchanged at record lows for a 14th consecutive month in July, with the one-year loan prime rate (LPR) held at 3.0% and the five-year LPR at 3.5%. The decision came despite softer-than-expected second-quarter economic data that underscored the uneven nature of China's recovery, as robust manufacturing output and exports continued to provide support while sluggish consumer spending weighed on growth. Attention is now focused on the upcoming Politburo meeting later this month for signals on stimulus measures.

The Chinese Yuan touched 6.77 against the USD, the highest since June 2026. Over the past 4 weeks, US Dollar Chinese Yuan lost 0.16%, and in the last 12 months, it decreased 5.82%.