FX.co ★ Offshore Yuan Trades Sideways

The offshore yuan remained steady around 7.17 per dollar on Tuesday, trading within a narrow range as market participants closely watched developments in Sino-US trade relations. Last week, China's commerce minister emphasized Beijing's goal to stabilize trade connections with Washington, highlighting recent discussions with the European Union as proof that a tariff conflict is avoidable, while urging the US to act sensibly. Analysts observed that as August approaches, market attention is likely to pivot towards changes in tariff expectations and imminent appointments at the US Federal Reserve. On the policy front, the People's Bank of China recently maintained key lending rates, reflecting a stable policy approach that has minimized fluctuations in the yuan. Additionally, China’s Conflux Network has introduced a new offshore yuan-denominated stablecoin, a measure intended to strengthen long-term liquidity in the CNH and support Beijing's initiative to internationalize the yuan. Investors are now looking forward to the forthcoming Politburo meeting, anticipating a positive policy direction but with limited capacity for significant stimulus, given the robust second-quarter GDP growth.