The offshore yuan remained stable at around 7.30 per dollar as investors returned from the New Year’s holidays.
Offshore yuan steady as Xi projects 2024 growth
On Tuesday, attention turned to President Xi Jinping’s New Year’s address, in which he forecasted China’s 2024 GDP would exceed 130 trillion yuan and highlighted plans for more proactive growth policies in 2025. Traders also focused on the People’s Bank of China’s policy stance, with the central bank strengthening yuan support by setting the official reference rate at 7.1879 per dollar on Thursday, following the yuan's drop to its weakest level since 2022.
Yuan faces pressure from liquidity, bond yields, and US dollar strength
Despite this, the yuan continued to face pressure due to abundant liquidity, a decline in Chinese bond yields, and the wide interest rate differential between China and the US. Additionally, the strengthening US dollar, driven by policies under the incoming Trump administration, added further downward pressure on the yuan.
