The offshore yuan strengthened to around 6.78 per dollar on Monday, its highest level since February 2023, as the US dollar weakened amid signs of a potential diplomatic breakthrough in the Middle East. Over the weekend, a senior US official indicated that Washington and Tehran are moving closer to an agreement that could reopen the Strait of Hormuz. However, President Donald Trump emphasized that he would not “rush” into a deal, while Iranian officials cautioned that the draft arrangement could still fall apart.
At the same time, Chinese President Xi Jinping is reportedly preparing to visit North Korea as early as this week or in early June, after having hosted US President Donald Trump and Russian President Vladimir Putin within the span of a week.
On the domestic front, investors are shifting their focus to China’s upcoming PMI releases later this week, which are expected to provide fresh insights into the health of the economy amid recent signs of cooling momentum in industrial production and retail sales.
