FX.co ★ Offshore Yuan Falls Amid Inflation Data

The offshore yuan weakened to approximately 7.18 against the dollar on Wednesday, reflecting investor responses to China's latest inflation figures. In June 2025, annual consumer prices inched up by 0.1%, halting a previous three-month sequence of 0.1% declines and surpassing market predictions of stable growth. Despite the slight revival in consumer inflation, the increase remained subdued due to pressures in the property sector and the reinstatement of tariffs by US President Donald Trump. Concurrently, annual producer prices experienced a sharper decline, falling by 3.6%, which was more significant than the projected 3.2% drop and more severe than the 3.3% decrease recorded in May. This represented the 33rd successive month of producer deflation and the most pronounced decline since July 2023. These persistent reductions in producer prices underscore growing economic challenges as China grapples with lackluster domestic demand and the uncertainties associated with escalating global trade tensions. Externally, the yuan faced additional downward pressure due to a strengthening US dollar, amidst heightened trade anxieties following recent actions by the Trump administration.