16.12.202503:40:10UTC+00Offshore Yuan Hits Fresh 15-Month Peak

The offshore yuan has appreciated to approximately 7.04 per dollar, marking a new fifteen-month high amid increasing advocacy for a stronger currency to aid in economic rebalancing. This development coincides with an unusual public discourse in China, where economists and former policymakers argue that the yuan is undervalued when compared to economic fundamentals. They contend that a modest appreciation could facilitate a transition from export-driven growth to one focused on domestic demand. Despite authorities emphasizing currency stability, recent softer economic data, indicating fragile consumer spending, weak investment, and a worsening property sector, have intensified pressure on policymakers. This has strengthened expectations for additional policy support and forecasts for a gradual appreciation of the yuan in the coming year. Additionally, a decline in the US dollar has provided further support, amid caution concerning key economic data that has been delayed due to a government shutdown.