FX.co ★ Offshore Yuan Extends Gains

The offshore yuan advanced slightly to approximately 6.97 per dollar, building on gains from the previous session as investors evaluated the latest inflation data. The annual consumer price inflation rose modestly to 0.8% in December 2025, up from 0.7% in November, reaching its highest point since February 2023. Concurrently, producer prices decreased by 1.9% year-on-year, an improvement from the 2.2% drop in the prior month and better than the anticipated 2% decline. Despite the rise in consumer inflation, these figures are unlikely to substantially alter the current monetary policy outlook, as overall price pressures remain muted. For the entirety of 2025, annual inflation averaged at zero, marking the lowest level since 2009 and falling significantly short of the government's target range of around 2%. Earlier in the week, the People’s Bank of China reaffirmed its dedication to fostering growth, indicating its willingness to reduce the reserve requirement ratio and lower key policy rates to ensure ample liquidity and maintain supportive financial conditions.