The offshore yuan strengthened to around 6.76 per dollar on Wednesday, extending the previous session’s gains to reach its highest level in a month. The move was largely driven by a weaker US dollar, even as Chinese data continued to signal uneven domestic growth. The greenback remained under pressure after softer-than-expected US inflation figures tempered expectations of a near-term Federal Reserve rate hike, with markets now largely pricing in a pause at the July meeting despite persistent, oil-related inflation risks.
In the meantime, China’s economy grew 4.3% year-on-year in the second quarter, its slowest pace since the fourth quarter of 2022 and below Beijing’s 2026 target range of 4.5%–5.0%. Fixed-asset investment fell 5.7% in the first half of the year, undershooting market forecasts and worsening from the decline recorded between January and May. Still, there were signs of resilience: industrial production accelerated to a three-month high of 5.3% in June, retail sales returned to growth with a 1% increase, and the urban unemployment rate edged down to a one-year low of 5.0%.
