Offshore Yuan Holds Gains

The offshore yuan hovered around 6.70 per dollar on Wednesday as upbeat PMI data and fresh policy support strengthened confidence in China's economic outlook. Official data showed China's Composite PMI rose to 50.7 in September 2026, its highest level since December 2025, as both manufacturing (50.1 vs 49.8) and non-manufacturing (50.2 vs 49) returned to expansion territory. Meanwhile, a private survey showed the Composite PMI climbed to 52.1, with both manufacturing (52.1 vs 51.5) and services (51.6 vs 51.4) continuing to expand. The latest readings came as policymakers rolled out fresh stimulus measures, including mortgage subsidies and expanded central bank funding support, while the State Council also pledged "a package of practical and effective additional policies." The yuan is on track for a seventh straight quarter of gains as exporters increased dollar-to-yuan conversions ahead of the week-long National Day holiday.

The offshore yuan strengthened to around 6.70 per dollar on Tuesday, extending gains from the previous session as expectations for policy stimulus grew to support domestic demand and economy. China’s government bond issuance is set to accelerate in Q4 after local governments used only 81% of their annual special bond quota in the first nine months of 2026, while the State Council said it may activate unused borrowing quotas from prior years, potentially allowing debt sales to exceed the remaining 2026 allocation. The prospect of increased debt issuance comes as concerns over China’s economic growth and domestic consumption deepen. Meanwhile, investors looked ahead to a batch of official and private PMI surveys due on Wednesday, with particular attention on assessing the resilience of China’s manufacturing sector, which is supported by solid foreign demand and strength in technology-related industries.

The offshore yuan depreciated to around 6.72 per dollar on Friday, marking its fourth straight session of losses as traders weighed developments from the Trump-Xi summit in Washington. Artificial intelligence was a key topic during Thursday’s White House meeting, with both leaders discussing how to manage competition in the rapidly evolving sector. Ahead of the talks, Trump reiterated his opposition to stricter AI guardrails, while Xi said both countries have the “capability and responsibility” to ensure the technology remains under human control. Separately, Xi urged the US to explicitly oppose Taiwan independence, marking his first public appeal for Trump to reconsider Washington’s longstanding stance on the self-governed island. The White House has yet to release an official readout of the meeting, leaving Trump's response unclear. Externally, the yuan remained under pressure from a firmer US dollar as markets priced in around a 67% chance of a Federal Reserve rate hike in October.