SHANGHAI: China’s yuan inched higher against the dollar on Monday, underpinned by persistently firmer-than-expected official guidance and optimism that trade tensions with Washington were easing as Beijing convenes for the plenum.
Meanwhile, China’s economic growth slowed to the weakest pace in a year in the third quarter, but many analysts expect the world’s second-largest economy remains on track to meet this year’s growth target of “around 5%.”
“At this stage, achieving the full-year growth target of 5% doesn’t appear too difficult, assuming no major geopolitical or macroeconomic shocks,” said Li Hao, research director at Cypress Investment Management.
To reach the annual growth target, China’s economy needs to expand 4.6% year-on-year in the fourth quarter, traders and analysts calculated.
As of 0320 GMT, the onshore yuan was 0.04% higher at 7.1248 per dollar, while its offshore counterpart traded at 7.1260.
Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate at 7.0973 per dollar, and 345 pips firmer than a Reuters’ estimate of 7.1318.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
Monday’s official midpoint continued to come in stronger than market projections, traders said, a move that investors interpreted as a policy preference for yuan stability, particularly around key political and economic events.
The elite Central Committee of China’s ruling Communist Party is scheduled to hold the Fourth Plenum from Monday to Thursday. It will outline the government’s economic, political and social agenda as well as its development plans for the next five years.
“Any adjustment to cyclical policy stance is anticipated to take place around the period of December’s Central Economic Work Conference, rather than immediately,” analysts at ANZ said in a note.
“Should economic indicators or market sentiment deteriorate, monetary policy easing is likely to occur toward the end of the year.”
Earlier in the session, China left benchmark lending rates unchanged for the fifth consecutive month in October, meeting market expectations despite signs of slowing economic momentum.
Separately, US Treasury Secretary Scott Bessent said on Friday he expects to meet this week with Chinese Vice Premier He Lifeng in Malaysia to try to forestall an escalation of US tariffs on Chinese goods that President Donald Trump said was unsustainable.
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