FX.co ★ Offshore Yuan Snaps 3-Session Decline

The offshore yuan appreciated to approximately 7.12 per dollar on Wednesday, halting a three-day downward trend, as the People's Bank of China reiterated its dedication to maintaining currency stability. The central bank consistently set the daily yuan reference rate at levels significantly stronger than market projections, aiming to counteract the broader economic and geopolitical effects of the intensifying US-China trade tensions. On the economic front, the latest inflation data highlighted ongoing weakness, with persistent deflationary pressures evident. Consumer prices dropped more than anticipated in September, although the decrease showed a slight improvement from August. Meanwhile, producer prices remained in deflation for the third consecutive year in August, albeit at a reduced pace compared to July. Externally, the yuan gained additional support from a weakening US dollar after Federal Reserve Chair Jerome Powell expressed openness to the possibility of an interest rate reduction at the policy meeting scheduled for late October.