China’s offshore yuan breaks major benchmark as appreciation momentum builds
For the first time since 2024, the currency strengthened past the threshold of seven per US dollar – and did it again the next day
China’s offshore yuan strengthened further on Thursday, dipping below the benchmark rate of seven against the US dollar – another sign of the currency’s continued appreciation after a brief breach of the same threshold on Wednesday evening.
The recent fluctuations mark the currency’s first appreciation past the major psychological marker in 15 months, suggesting a change in market sentiment and providing more support for the global investors and economists who have argued the currency has been undervalued.
The offshore yuan’s exchange rate reached a high of 6.9960 on Thursday morning, according to figures from Chinese financial data provider Wind, after briefly moving to 6.9999 on Wednesday. The onshore yuan, meanwhile, hit 7.01 against the US dollar on Thursday. Both rates were reached for the first time since September 2024.
The yuan’s recent strengthening reflects both a weaker US dollar and shifts in the supply and demand of foreign exchange, analysts said.
Sustained trade surpluses and concentrated settlement of foreign exchange among companies have provided a temporary boost in demand for China's currency, compounded by investor concerns related to the sustainability of US government debt.