Offshore Yuan Edges Higher

The offshore yuan edged higher to around 6.70 per dollar on Thursday, after holding steady in the previous session, as China broadens currency clearing in a bid to advance the yuan’s internationalization. The Shanghai Clearing House started central counterparty (CCP) services for spot trades in the Singapore dollar, New Zealand dollar and Thai baht on Sept. 14, with twelve banks clearing 996 million yuan ($148 million) in the first session. The move could set the stage for more currencies to be cleared directly against the yuan as Beijing seeks to broaden its global use, alongside efforts by Chinese banks this year to expand clients’ access to direct yuan trading amid growing cross-border trade and investment. Meanwhile, US Treasury Secretary Scott Bessent is set to meet Chinese Vice Premier He Lifeng this weekend for final preparatory talks ahead of the Sept. 24 summit between Presidents Donald Trump and Xi Jinping in the US.

The offshore yuan edged higher to around 6.70 per dollar on Wednesday, recovering from modest losses in the previous session as optimism over US-China trade negotiations supported sentiment. Expectations for an extended trade truce between the world's two largest economies have strengthened, with Washington and Beijing reportedly discussing tariff reductions on a range of goods, including US energy and agricultural products. Treasury Secretary Scott Bessent said that he will meet Chinese Vice Premier He Lifeng this weekend ahead of the Sept. 24 Trump-Xi summit in the US. On the economic front, fixed-asset investment in the January–August 2026 period recorded its steepest contraction since January–April 2020, while retail sales growth slowed to a three-month low. In addition, the unemployment rate edged up to a five-month high in August. Providing some relief, industrial output growth accelerated, while the annual decline in new home prices eased to its smallest since December 2025.

The offshore yuan traded around 6.70 per dollar on Monday, hovering close to its strongest level since January 2023 as investors increasingly turned to the currency as a funding option for carry trades. The recent surge in the yen has prompted investors to look for alternatives such as the yuan, given China's relatively low interest rates and currency stability. While major central banks face pressure to keep rates elevated or tighten policy further, China's comparatively low borrowing costs allow investors to finance higher-yielding assets at a lower cost. On the economic front, annual consumer inflation rose to 0.8% in August, matching forecasts and accelerating from a six-month low of 0.5% in July. Producer price inflation also picked up to 3.8% from a three-month low of 3.5%, exceeding market expectations of 3.7%. The increase in price pressures was driven mainly by higher energy costs amid ongoing tensions in the Middle East.