HONG KONG- China’s yuan strengthened to fresh three-month highs against the US dollar on Monday as a strong domestic equity market performance and broader dollar weakness continued to boost the currency’s momentum.
The importance of currency stability will remain the top priority for policymakers heading into the National People’s Congress (NPC) meeting next week, analysts at Barclays said in a note, adding that inflation targets and fiscal support measures will be among key items to watch.
The spot yuan was 0.3 percent higher at 7.2313 to the dollar by midday, the highest level since November 29, 2024. The offshore yuan traded at 7.2304 yuan up about 0.36 percent in Asian trade.
The Chinese currency has strengthened for four straight days, as an AI-triggered rebound in domestic stock markets and recent weakness in the greenback buoyed sentiment.
That has helped the yuan to climb 0.3 percent against the dollar this month and firm 0.9 percent so far this year, after hovering around multi-year lows of 7.33 in January.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.1717 per dollar. The central bank has set its official guidance on the firmer side of market projections since mid-November, which analysts and traders see as a sign of unease over the yuan’s decline.
Chinese government 10-year bond yields rose 3.6 basis points to 1.78 percent, while the yield on similar US government benchmark debt dropped to 4.4 percent. The dollar’s six-currency index was 0.3 percent lower at 106.16 to the lowest level since December, after a sell-off on the Wall Street on Friday and soft economy data dented sentiment.
