Yuan holds near 3-1/2-year high against dollar as rate bets ease

Business Recorder reported that China's onshore yuan held close to a 3-1/2-year high versus the dollar on Monday, trading near 6.6920 per dollar during late-morning hours. Lower market bets on a US rate hike in October supported the currency, although trade tensions could weigh on the outlook. The midpoint was fixed by the central bank at 6.7313 per dollar before trading began, the firmest level since February 2, 2023.

The dollar index stayed near its loftiest reading of the past year and a half, as recent economic numbers lowered the odds of one more rate increase this month. The yuan is up roughly 4% on the year against the dollar and near 9% since the end of 2024, a seven-quarter winning streak. A widening gap between Chinese and US yields limits the yuan's rise, while Europe's debt worries keep the safe-haven greenback firm.

Huatai Futures analyst Cai Shaoli said a weaker euro added another source of support to the dollar. COFCO Futures analyst Fan Yongjia pointed to resilient Chinese exports, but warned that rising trade protectionism could slow the yuan's rally. Maros Sefcovic, the European Trade Commissioner, said on Friday that a China-EU agreement may curb hybrid car shipments to the bloc by over half. China Merchants Futures noted the dollar index above 102 and expected the yuan to move between 6.65 and 6.75 per dollar.