23.01.202602:48:18UTC+00Offshore Yuan Gains on Stronger Fixing

On Friday, the offshore yuan appreciated to approximately 6.95 per dollar, halting a two-day losing streak. This rise came as the People's Bank of China established its daily midpoint fixing below the critical 7-per-dollar mark. Specifically, the central bank set the yuan at 6.9929 per dollar, marking the first instance of this benchmark being set below 7 since May 2023. This adjustment highlights an evolving official stance favoring a stronger currency, indicating policymakers' readiness to embrace further yuan appreciation and their openness to accommodating additional gains amid a weakening US dollar. Over the past month, the yuan has climbed approximately 1% against the US dollar, outperforming most regional currencies. This appreciation has been fueled by China's substantial $1.2 trillion trade surplus, robust capital inflows, and an improving outlook for Chinese equities. As the week wraps up, the currency is poised for its second consecutive weekly advance, lingering near its strongest point since May 2023.