06.01.202603:42:55UTC+00Yuan Remains Firm Amid Seasonal Demand

The offshore yuan remains steady at approximately 6.98 per dollar, marking a near thirty-two-month high. This stability is attributed to ongoing seasonal demand, alongside the central bank's careful guidance. End-of-year foreign exchange settlements have shown strength, as exporters continue converting overseas earnings to fulfill domestic requirements, such as bonus distributions ahead of China’s major annual celebration, the Lunar New Year in mid-February. Since May, the People’s Bank of China (PBOC) has been orchestrating a gradual yuan appreciation, opting for a more restrained adjustment of the midpoint than the market had anticipated. This approach aims to sustain market stability, deter disorderly dollar sales, and prevent drastic fluctuations. Authorities are focused on curbing so-called "overshooting," although the yuan is anticipated to continue appreciating, bolstered by an economic recovery and foreign capital inflows. President Xi Jinping has conveyed that the economy is progressing towards achieving a 5% GDP growth by 2025. Further reports indicate that the nation's current account dynamics suggest there is potential for the yuan's ongoing strengthening.