The Chinese yuan surged to its strongest position since September 2024 this week, with both onshore and offshore exchange rates breaking through psychologically significant thresholds. On Thursday, the offshore RMB strengthened past 7.0 yuan per US dollar, while the onshore rate closed at 7.01 – levels unseen in over a year.
The People's Bank of China set Thursday's central parity rate at 7.0392, marking a 79-pip gain that reflects growing market confidence. This year's 4.6% appreciation of the offshore yuan against the greenback highlights the currency's remarkable resilience amid global economic uncertainties.
Three key factors driving the rally:
Sustained foreign capital inflows into China's bond markets
Improved trade balance figures from Asian manufacturing hubs
Diverging monetary policies between the Federal Reserve and Asian central banks
Market analysts suggest the currency strength could bolster China's position as Asia's economic anchor while creating new opportunities for cross-border investors. However, some exporters express concern about potential margin pressures if the appreciation trend continues into 2026.
