The offshore yuan weakened to around 6.915 on Monday, its lowest level in more than two weeks, as escalating tensions in the Middle East strengthened the US dollar and dampened broader risk appetite. The safe-haven greenback held firm amid a deepening standoff between US President Donald Trump and Iran over the Strait of Hormuz, which pushed oil prices higher and intensified global inflation concerns. Those developments, in turn, reinforced expectations of tighter monetary policy from major central banks.
Last week, the People’s Bank of China left key interest rates unchanged, underscoring a cautious policy stance that provided only limited near-term support for the yuan. Even so, sentiment received some relief after officials at the China Development Forum adopted a reassuring tone, stressing policy stability, further opening of markets, and measures to bolster domestic demand. Authorities also played down the recent weakness in the yuan, characterizing the currency’s volatility as largely the result of external shocks rather than domestic economic fundamentals.
