The offshore yuan strengthened past 6.81 per USD, reaching its highest level in more than three years as stronger-than-expected economic growth in China lifted market sentiment. The world’s second-largest economy expanded by 5% in the first quarter from a year earlier, accelerating from 4.5% in the previous quarter and beating forecasts.
Still, signs of fragility have begun to emerge as the war involving Iran disrupts global supply chains. March data painted a mixed picture: industrial production rose 5.7% year-on-year but slowed compared with earlier in the year, while retail sales grew just 1.7%, undershooting expectations and easing from the prior period. This came on the heels of recent trade figures showing a sharp slowdown in China’s export growth, suggesting the ongoing conflict in the Middle East is weighing on global demand.
Meanwhile, the US and Iran are considering extending their two-week ceasefire to allow more time for negotiations, even as the Strait of Hormuz remains effectively closed under a dual blockade.
