The offshore yuan weakened to around 6.88 per dollar on Thursday, snapping a three-day winning streak as the US dollar strengthened amid renewed uncertainty over a potential de-escalation of the conflict in the Middle East. In his remarks, Trump said the war involving Iran was “very close” to completion and that he expected key objectives to be achieved in the coming weeks, while also cautioning that military operations could still intensify even as diplomatic efforts proceed.
At the same time, the People’s Bank of China has adopted a more cautious monetary stance. In March, it withdrew CNY 890 billion through short-term operations and absorbed an additional CNY 250 billion via longer-term instruments, effectively reversing months of liquidity injections that followed the sharpest economic slowdown since China emerged from Covid lockdowns in late 2022. With growth now showing signs of recovery and oil prices pushed higher by the conflict involving Iran, the central bank appears focused on containing inflationary pressures while gradually guiding the economy out of a period of record deflation.
