China's yuan gets stronger after dollar slumps overnight

According to Business Recorder, the Chinese yuan reached its firmest level in three and a half years on Thursday after the dollar weakened overnight. In early trading the onshore yuan touched 6.7203 per dollar, its strongest point since February 2023. The greenback had fallen 0.8 per cent against major currencies, reaching its lowest level in two and a half months, partly because US yields eased after the Treasury announced support for long-dated bonds.

Gains were capped, however, by the People's Bank of China, which set its reference rate at 6.7808 per dollar before the market opened. That fixing was 612 pips weaker than a Reuters estimate, the largest weak-side deviation since February, and it was designed to slow the pace of the yuan's appreciation.

The support measures left concerns over US fiscal health intact, since total US debt topped $40 trillion for the first time. Guosheng Securities said the plan to double long-bond buybacks aimed to steady market liquidity, but the structural pressure from rising deficits and long-term bond supply remained. Nanhua Futures attributed Thursday's yuan strength directly to the weaker dollar and advised traders to watch US inflation and employment data.