China’s yuan rallies to three-year high on US-Iran ceasefire deal

HONG KONG: China’s yuan jumped to a more than three-year high against the US dollar as the greenback dropped after US President Donald Trump agreed to a two-week ceasefire with Iran.

The onshore yuan hit 6.8287 per dollar in morning trade on Wednesday, while the offshore yuan rose to 6.8270 per dollar, both marking the highest level since March 2023.

 Yuan went higher alongside other Asian currencies as a ceasefire deal lifted risk appetite and eased worries over energy shortages for many Asian countries, analysts said.

 Also supporting the local currency, prior to the market opening, the People’s Bank of China set the midpoint rate at 6.8680 per dollar, its strongest since April 17, 2023 and 311 pips weaker than a Reuters’ estimate.

The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

Analysts are cautiously optimistic about energy prices amid easing tensions in the Middle East and believe China is in a relatively better position.

“We think it would still make sense to stay with our Asia currency preference of the likes of CNY and MYR… notwithstanding how the Iran conflict and negotiations will play out,” MUFG analysts said in a note on Wednesday.

 The yuan is up 1.0% against the dollar this month, and is 2.4% firmer this year.

 The currency has rebounded to pre-Iran war levels, supported by the country’s oil stockpiles and resilient energy supply chains.