FX.co ★ Offshore Yuan Falls as Geopolitical Risks Rise

On Wednesday, the offshore yuan continued its decline, falling past 7.14 per dollar for the third consecutive session. This downward trend reflects the prevailing negative market sentiment, which has been exacerbated by increasing geopolitical tensions following remarks by President Xi Jinping. During the "Victory Day" parade, Xi emphasized the global crossroads between "peace or war" and "dialogue or confrontation," while also committing to bolstering China’s military strength. This came in response to a statement from US President Donald Trump, who called on Xi to acknowledge America’s role in granting China wartime freedom and accused Beijing of plotting against Washington, further escalating tensions in US-China relations. Nevertheless, the yuan's depreciation was somewhat mitigated by positive economic data. A private survey revealed that China’s Composite PMI climbed to a nine-month high of 51.9 in August 2025. This increase was driven by a rise in manufacturing activity, which reached a five-month high of 50.5, up from 49.5, and a robust performance in the services sector, which hit a more than one-year high of 53, compared to 52.6.