The offshore yuan inched lower to around 6.894 per USD, trading in a narrow range as markets remained cautious amid mixed signals over Middle East tensions. The dollar initially softened after former US President Trump delayed planned strikes on Iranian energy infrastructure, citing “productive” discussions with Tehran. However, the greenback later rebounded after Iran denied any talks to de-escalate the conflict, directly contradicting those claims. Tehran also reported launching new attacks on US targets, while Israel continued its strikes on Iran, keeping geopolitical risks and oil prices elevated.
Against this backdrop, China appears relatively well positioned, given its lower reliance on imported energy and its competitive advantage in renewables. Premier Li pledged to increase imports of high-quality foreign goods and promote more balanced trade, while PBoC Governor Pan moved to ease concerns about China’s large trade surplus. Even so, the yuan is expected to remain volatile, pressured by a firm US dollar and the waning of seasonal support.
