China’s yuan slips from 3-week high as Trump vows sustained strikes on Iran

SHANGHAI: China’s yuan slid from a three-week high against the dollar on Thursday after US President Donald Trump gave no clear timeline for ending the Middle East war in a prime-time speech, and instead warned of more strikes on Iran in the weeks ahead.

 Trump said the US military had nearly completed the goals it had set out to accomplish in its war with Iran and that the conflict would soon be ending. But the president vowed to keep hitting Iran “extremely hard over the next two to three weeks,” unnerving markets.

 “We have no additional certainty or clarity around timeline from this address and this is what the market was looking for,” said Jon Withaar, senior portfolio manager at Pictet Asset Management.

“The fact that we can expect 2-3 more weeks of action, boots on the ground were not ruled out and that threats to hit infrastructure were reiterated will put the market back on the defensive, particularly as we come into the long weekend.”

The dollar advanced on safe-haven buying following Trump’s speech and pressured other major currencies, including the yuan. The onshore yuan eased to 6.8850 per dollar as of 0303 GMT from a three-week high of 6.8708 hit a day earlier.

Its offshore counterpart fetched 6.8879 per dollar.

The dent to global risk appetite outweighed a much strengthened official guidance rate set by the central bank. Prior to market opening, the People’s Bank of China (PBOC) set the midpoint at 6.8750 per dollar, the strongest fix since April 25, 2023.

Despite the geopolitical turmoil, the yuan remains one of the best performing emerging market currencies since the Middle East war erupted in late February, down about 0.5% versus the dollar, which has rallied about 2.4% during the same period.

“China is widely viewed as relatively insulated from oil-price shocks,” analysts at UOB said in a note.

They maintained their forecast for a steadily strengthening yuan this year to trade at 6.95, 6.90 and 6.85 at the end of the second-, third-quarter and year-end, respectively.