Offshore Yuan Hits Fresh 4-Year High

The offshore yuan strengthened to around 6.69 per dollar on Monday, reaching its strongest level since June 2022 as investors welcomed a string of strong economic data. China’s economy grew 4.5% year-on-year in Q3 2026, accelerating from Q2’s three-year low of 4.3% and beating market expectations of 4.4%. Growth in the first nine months reached 4.6%, keeping the economy on track to meet the government’s full-year target of 4.5%-5%. Meanwhile, industrial output growth accelerated to 5.5% in September from 5.2% in August, while retail sales growth picked up to 1.1% from 0.4%. The surveyed urban unemployment rate also edged down to 5.2% from a five-month high of 5.3%. Investors will look to China’s top financial regulators at the Financial Street Forum in Beijing later today for policy signals to further support the economy amid growing speculation about a shift from the seven-day policy rate to an overnight benchmark.

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.