Yuan holds near 3-1/2-year peak as central bank slows gains

Business Recorder reported that China's yuan traded near a 3-1/2-year high against the dollar on Tuesday, as the central bank eased the pace of its climb after two months of gains. Market participants said the People's Bank of China has set its daily midpoint weaker than traders had expected, a signal that authorities want to limit further rises after the currency gained about 4% this year. Early trading saw spot rates touch 6.7192 per dollar, just four pips from last week's 6.7188 peak, before the yuan eased back to 6.7210.

The offshore yuan was quoted at 6.721 per dollar in Asian trade, down about 0.05 per cent. The midpoint of 6.7809 was the firmest in almost two weeks, yet it came in roughly 640 pips under a Reuters forecast, nearly matching February's weak-side record. Under the rules, the spot rate may move up to 2 per cent on either side of that midpoint each day.

Market participants linked the slower climb to support for exporters, since growth increasingly leans on factories and overseas demand while consumers hold back and property remains weak. Trading partners are uneasy that surplus Chinese output is being shipped to foreign markets. US Treasury Secretary Scott Bessent said on Sunday he would urge G20 members to revisit trade terms with China, and CMB International analysts warned the yuan could face near-term pressure.