Offshore Yuan Holds Firm

The offshore yuan held firm around 6.66 per dollar on Tuesday, finding support from robust external trade data as China’s year-to-date trade surplus crossed the $1 trillion threshold for the second time on record. China’s exports surged 35.2% year-on-year to $412.33 billion in October 2026, driven by sustained global demand for AI-related technology products. Imports also expanded sharply, jumping 41.6% to $307.05 billion, the fastest annual growth since May 2021. Through the first ten months of the year, exports grew 22.7% and imports rose 29.0%, bringing the trade surplus to $1.043 trillion and putting the full-year figure on track to eclipse last year’s record of $1.2 trillion. The currency also drew support from a softer US dollar, as markets positioned for October US CPI data, which are expected to show cooling headline and core inflation alongside stabilizing energy prices.

The offshore yuan fell to around 6.66 per dollar on Monday, extending its decline from the previous week as lingering domestic economic weakness outweighed positive sentiment from easing US–China trade tensions. Annual CPI inflation slowed to a three-month low of 0.7% in October from 0.9% in September. Meanwhile, producer price inflation rose to a more than four-year high of 5.7% from 5% in September. The growing gap between surging factory-gate prices and soft consumer inflation highlights mounting margin pressure on Chinese manufacturers, who face elevated input costs but lack sufficient domestic demand to pass them on to consumers. Separately, China extended the suspension of an additional 24% tariff on US goods until January, while keeping the baseline 10% import duty intact and prolonging the waiver on special port fees for American vessels through Jan. 10. The moves formalize the framework hammered out by Presidents Donald Trump and Xi Jinping during their October summit.

The offshore yuan slid to around 6.66 per dollar on Tuesday, retreating from a more than four-year high in the previous session after the People’s Bank of China moved to curb its rapid appreciation by raising the foreign exchange reserve requirement ratio. The central bank announced a 2-percentage-point increase in the ratio to 6% from 4%, effective November 15. The move aims to drain foreign currency liquidity from the onshore interbank market, making it more costly for financial institutions to hold dollars and discouraging commercial lenders from selling them, thereby slowing the yuan’s recent gains. The yuan’s rally has been underpinned by robust export growth, with shipments surging 36.3% year-on-year to USD 447.18 billion in September 2026, marking the fastest annual increase in seven months. Strong global demand for electronics and semiconductors continued to support exports, helping the currency appreciate around 5% so far this year.