FX.co ★ Offshore Yuan Eases Amid Weaker Fixings

The offshore yuan fell slightly below 6.96 per dollar on Tuesday, retreating from its 32-month high. This movement followed the People’s Bank of China setting a weaker daily midpoint. The central bank set the yuan at 6.9858 before the market's opening, a level slightly higher than the previous session but below market expectations. The ongoing trend of weaker fixings since November highlights Beijing’s cautious approach to preventing a rapid yuan appreciation. Although the softer fix does not suggest a major policy change, it represents an attempt to control the yuan's appreciation pace and maintain stable market conditions. Simultaneously, China's industrial profits experienced their first monthly increase since September and the first annual growth since 2021, supported by Beijing's measures to limit excess competition and bolster factory earnings. Market participants now turn their attention to the upcoming PMI figures, with both official and private surveys expected this week. In addition, the US dollar is facing pressure amid escalating concerns about the Federal Reserve's independence.