Yuan firms on rising China bond yields

SHANGHAI: China’s yuan firmed against the dollar on Thursday, underpinned by a rise in domestic bond yields as investors assessed the impact of an escalating global trade war.

Contrary to market consensus, the yuan has held steady despite higher tariffs, while government bond yields have risen rather than fallen, said Larry Hu, an economist at Macquarie.

Hu attributed recent weakness in the dollar and the success of local startup DeepSeek as reasons behind improved risk sentiment, which in turn, supports the yuan.

The dollar index, which measures the currency against a basket of six major peers, slipped 0.029% at 103.56, hovering near a 4-month low.

Meanwhile, higher bond yields underpinned the yuan.