FX.co ★ Offshore Yuan Hits One-Month Low

The offshore yuan weakened to around 6.92 per USD on Monday, reaching a four-week low as market uncertainty deepened. The move followed another sharp rise in oil prices amid the escalating war in the Middle East, while investors also digested the latest domestic inflation data. Consumer prices in China accelerated to a three-year high in February, rising 1.3% year-on-year, well above January’s 0.2% increase and market expectations of 0.8%, driven in part by stronger holiday-related spending. At the same time, producer prices remained in deflation but showed signs of improvement, falling 0.9% from a year earlier after a 1.4% drop in January and beating the anticipated 1.2% decline, suggesting some stabilization in upstream price pressures. On the geopolitical front, the US-Israel conflict with Iran has entered its second week with no clear path to resolution, while major Middle Eastern oil producers have been cutting output and shipments through the Strait of Hormuz remain suspended. China, the world’s largest energy importer, is partially shielded from the impact by its sizable strategic crude reserves.