China's yuan gains as Fed rate caution knocks dollar from 18-month high

Business Recorder reported that China's yuan strengthened slightly against the dollar on Thursday, as the US currency pulled back from an 18-month high. The move followed remarks from Federal Reserve officials who urged caution about a possible interest rate increase this month, despite inflation figures that came in above expectations. In onshore spot trade the yuan stood 0.09% firmer at 6.6918 per dollar by 0307 GMT, while the offshore unit traded at 6.6921.

The People's Bank of China set its daily midpoint at 6.7253 per dollar before the market opened, which was 276 pips weaker than a Reuters estimate of 6.6977. Based on that official midpoint, the CFETS basket index rose to 103.73, a level not seen in over four years. Against major trading partners the currency is up about 5.9% this year, compared with 4.5% versus the dollar.

Analysts at Pantheon Macroeconomics expect gradual yuan gains through 2026 and into 2027, with occasional volatility, and say strong high-tech exports make modest appreciation manageable. Traders said upbeat trade and credit data supported sentiment, though attention is turning to Monday's third-quarter GDP release. Societe Generale economist Michelle Lam said China appears well placed to reach its growth goal of between 4.5% and 5.0% this year.