FX.co ★ Offshore Yuan Extend Gains

The offshore yuan strengthened to approximately 7.12 per dollar on Monday, continuing its gains from the prior session. This rise was spurred by new policy measures and anticipations of additional economic stimulus. The People’s Bank of China has implemented initiatives to attract foreign investment into its bond market and encourage broader utilization of the yuan, such as by expanding access to the bond repurchase market. Furthermore, the central bank has established a digital yuan center in Shanghai and laid out plans to enhance offshore yuan activities in Hong Kong. The currency's sentiment was bolstered by data indicating a return to growth in industrial profits in August. Analysts suggest that a combination of more relaxed monetary and fiscal policies could further augment the yuan, with anticipated rate cuts later this year. Investors are now focused on the upcoming Purchasing Managers' Index (PMI) figures to assess the country's economic condition. Meanwhile, the US dollar faced pressure due to worries over a potential government shutdown, while all eyes are on Trump's meeting with congressional leaders today for progress on a funding agreement.