FX.co ★ Offshore Yuan Nears 7-Month High

The offshore yuan edged up to approximately 7.16 per dollar on Monday, reaching its highest level since early November 2024, driven by a generally weaker dollar. The dollar's decline came amidst market caution regarding Trump's unpredictable policy shifts, which triggered capital outflows from the United States. Investors were assessing his recent decision to delay imposing 50% tariffs on EU imports following the EU's request for additional time to "reach a good deal." In reaction to the dollar's weakness and the yuan's ascent, the People's Bank of China set the daily yuan fixing at 7.1833—higher than anticipated—indicating its aim to temper yuan appreciation and ensure currency stability. Nevertheless, the yuan continued its rise, supported by a Memorandum of Understanding between China and Indonesia to enhance bilateral trade and investment through local currencies, reducing dependency on the US dollar. Additionally, the yuan was bolstered by a recent agreement between the US and China to keep communication channels open to aid in facilitating trade negotiations.