Yuan holds firm as steady fixing, upbeat data outweigh geopolitical risks
- The yuan was 0.03% higher at 6.8289 to the dollar
HONG KONG: China’s yuan inched higher on Monday against the dollar, supported by a firm central bank fixing and the fastest growth in industrial profits in six months, even as Middle East tension kept investors on edge.
The yuan was 0.03% higher at 6.8289 to the dollar by 0231 GMT. Its offshore counterpart traded at 6.8285 yuan per dollar, up about 0.1% in Asian trade.
Profits at China’s industrial firms grew at their quickest last month in half a year, data from the National Bureau of Statistics showed, adding to broader signs of an uneven economic recovery as policymakers brace for the impact of the Iran war.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 6.8579 per dollar, its strongest since March 2023, and 297 pips weaker than a Reuters estimate.
The spot yuan is allowed to trade 2% on either side of the fixed midpoint each day.
“RMB has gained traction in the current energy crisis, benefiting from China’s macro and energy resilience,” analysts at LGT Private Banking said in a note.
“Solid trade surplus, robust PBoC fixing guidance, and improving macro indicators may further underpin cyclical supports for the RMB.”
The yuan is up 1.0% this month against the dollar, which has given up most of its safe-haven premium, triggered by the Middle East conflict, as markets priced in optimism for a possible peace deal.
“We continue to expect 6.80 to remain as the next key line of support for USDCNY,” Barclays analysts wrote in a note. “Should the dollar extend its gains, we would expect further relative CNY outperformance versus peers.”
Elsewhere, sentiment was cautious after President Donald Trump cancelled a trip on Saturday by two US envoys to Iran war mediator Pakistan, in a setback for peace prospects after Iran’s foreign minister left Islamabad after speaking only with Pakistani officials.
The dollar’s six-currency index was little changed at 98.48. Oil prices surged, with Brent crude futures jumping to a three-week high as US-Iran peace talks stalled.
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