Offshore Yuan Extends Gains to Over 4-Year High

The offshore yuan strengthened to around 6.68 per dollar on Tuesday, extending gains for a fourth straight session and hitting its strongest level since June 2022, as stronger economic growth reduced the urgency for further monetary easing. The PBoC kept the one-year LPR unchanged at 3% and the five-year rate at 3.5%, holding both at record lows for the 17th consecutive meeting. China’s GDP grew 4.5% yoy in Q3 2026 from Q2’s three-year low and keeping the government’s FY growth target of 4.5%–5% within reach. This gives policymakers more room to hold off on additional easing after rolling out fresh targeted measures to support the domestic economy. China’s growing reliance on foreign trade amid weak domestic demand has prompted foreign leaders to slam Beijing for keeping the yuan undervalued, arguing that the currency gives exporters an unfair competitive edge. The IMF estimates the yuan was undervalued by 17.3% to 25.3% in 2026, with a midpoint of 21.3%.

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.