On Tuesday, the offshore yuan hovered around 7.18 against the dollar, maintaining a narrow trading range as geopolitical tensions persisted. Investors closely watched developments while the People's Bank of China (PBOC) continued to emphasize currency stability. On Monday, U.S. President Trump called for the evacuation of Tehran following Israeli strikes on significant locations in the capital. He warned that Iran "cannot have a nuclear weapon" and should have signed an agreement. Despite the rising tensions, signs of diplomatic outreach by Iran and stable oil supplies helped mitigate wider market disruptions.
In a move underlining its commitment to exchange rate stability, the PBOC set the daily yuan midpoint at 7.1746, marking its strongest stance since March. This measure comes as Beijing prepares for its upcoming policy meeting, during which markets anticipate the PBOC will maintain stable loan prime rates. Market participants are now looking forward to policy insights from Chinese officials at the Lujiazui Forum scheduled for this week, in addition to commentary from the Federal Reserve amid a series of global central bank meetings.
