Yuan dips as safe-haven dollar firms; trade-weighted gauge stays resilient

SHANGHAI: The yuan eased against the dollar on Thursday as the conflict in the Middle East underpinned safe-haven bids for the greenback, though the Chinese currency remained firm on a trade-weighted basis.

 The dollar hovered close to its strongest levels so far this year as climbing oil prices threatened to spur inflation and force global central banks to adopt more hawkish policy stances.

The spot yuan opened at 6.8750 per dollar and last traded at 6.8773 at 0228 GMT, 24 pips lower than the previous late-session close.

Prior to the market opening, the People’s Bank of China set the midpoint at 6.8959 per dollar, 106 pips weaker than a Reuters estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

Beijing is pursuing export growth to offset a property slump while risking an unsustainable trade gap, said Ting Lu, chief China economist at Nomura, adding that market participantsare seeking to determine if authorities allow or even engineer yuan appreciation to navigate the situation.

China roared into 2026 with exports far outstripping forecasts, fuelled by red-hot electronics demand, putting the economy on track to top last year’s record $1.2 trillion trade surplus.

China’s trade-weighted CFETS yuan basket index rose to 99.89 on Thursday, hovering near its highest level in a year and up 1.94% so far this year, according to Reuters calculations, suggesting the yuan remained resilient versus its peers.

 The yuan is down 0.3% against the dollar this month, but is still 1.7% firmer this year. Chinese companies have rushed to derivatives for protection from currency exposure as a rising yuan has hurt some exporters for months and - more recently - the war in Iran has ramped up volatility.

The offshore yuan traded at 6.8793 yuan per dollar, down about 0.03% in Asian trade.

The dollar index, which measures the greenback against a basket of six currencies, was 0.013% lower at 99.43.‑Reuters