Offshore yuan steady for second consecutive session

The offshore yuan held steady for the second consecutive session at around 7.12 per dollar on Wednesday, as markets digested the latest batch of Chinese inflation data.

Annual consumer prices slipped 0.4% in August, deeper than July’s flat reading and below expectations for a 0.2% decline, underscoring persistent weakness in domestic demand.

Producer prices also fell 2.9% year-on-year, moderating from a 3.6% drop in July and broadly in line with forecasts. While the decline marked the 35th straight month of factory-gate deflation, it was also the smallest contraction since April, suggesting tentative signs that price pressures may be stabilizing.

The data reflects Beijing’s ongoing efforts to stimulate consumption and rein in excessive discounting across major industrial sectors, where fierce competition has weighed heavily on margins.

Still, analysts note that sustained improvement will likely depend on the strength of credit growth, fiscal stimulus, and the rollout of targeted support for property and manufacturing industries. The stability of the yuan also suggested that authorities may be carefully managing expectations ahead of the policy-heavy autumn calendar.

Investor focus now turns to the 17th session of the 14th National People’s Congress Standing Committee, running from Wednesday through Friday, where further clues on fiscal priorities, regulatory shifts, and potential new policy measures could emerge.

On the international stage, trade and geopolitical risks remained in the spotlight. US President Donald Trump reportedly urged the European Union to slap tariffs of up to 100% on Chinese and Indian goods over their continued purchases of Russian oil, while Washington signaled readiness to implement similar measures.

The escalating rhetoric highlighted the risk of renewed trade frictions, which could weigh on China’s export outlook at a time when external demand is already under pressure.