FX.co ★ Offshore Yuan Nears 7-Per-Dollar Threshold

On Thursday, the offshore yuan strengthened to approximately 6.98 per dollar, marking a recovery from the previous session and edging closer to the significant 7-per-dollar benchmark. This upward movement was primarily stimulated by exporters increasing their conversion of dollar assets into the local currency. As the year draws to a close, exporters generally ramp up these foreign-exchange conversions to fulfill various domestic commitments, such as covering administrative expenses and disbursing employee-related payments. Further bolstering the yuan was a wave of optimism in the stock market, highlighted by the Shanghai Composite Index reaching its highest level in a decade, thereby enhancing broader confidence in Chinese investments. Nevertheless, the yuan's rise was somewhat restrained due to a weaker-than-anticipated daily midpoint fixing, which was set at 7.0197 per dollar, indicating a more cautious approach from the People’s Bank of China. Looking forward, investors are closely monitoring upcoming inflation figures, which may offer further insights into the future direction of monetary policy.