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China sets yuan at strongest rate in years as Greenland furore affects US dollar

China’s central bank set the yuan fixing rate at under 7 per US dollar for the first time since mid-2023 as concerns over dollar assets mount

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China’s yuan has broken through the psychologically important level of 7 per US dollar for the first time in years, as confidence in US dollar assets weakens. Photo: Shutterstock
Sylvia Ma

China’s central bank has strengthened the yuan’s daily fixing rate to break through the psychologically important level of 7 per US dollar for the first time since May 2023, as the American currency weakens amid concerns over recent US attempts to gain control of Greenland.

The People’s Bank of China set the yuan’s midpoint rate – also known as the daily fixing rate – at 6.9929 to the US dollar on Friday, after weeks of keeping the benchmark just on the weaker side of the 7 mark.

The move came as market confidence in US dollar assets weakened following US President Donald Trump’s threats to raise tariffs on eight European countries unless they allowed America to take control of Greenland, a semi-autonomous Danish territory.
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Though Trump later walked back this proposal at the World Economic Forum in Davos, Switzerland, some European institutional investors have announced plans to sell off – or have already begun reducing – their US Treasury holdings, sparking discussion about Europe’s potential “weaponisation” of its holdings of US dollar assets.

The US dollar index had slumped to about 98.27 from 99.45 earlier this week, before edging up to 98.37 late on Friday morning.

Meanwhile, the yuan has been steadily strengthening in recent months. The fixing rate on Friday was still weaker than the value of the offshore yuan, which was trading at around 6.96 to the US dollar as of late Friday morning.
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