Offshore Yuan Holds Firm Near 10-Month Peak
The offshore yuan remained subdued below 7.14 per dollar on Tuesday, maintaining its position close to a ten-month high as investors continued to evaluate geopolitical events. Focus was directed towards the Shanghai Cooperation Organization summit in Tianjin, where Chinese President Xi Jinping underscored the importance of a multipolar strategy alongside Russia and India. He highlighted initiatives to establish new regional financial entities aimed at reducing dependence on the US dollar. Analysts have suggested that this strategy could enhance long-term demand for the yuan, especially following China's report of a record trade surplus exceeding $685 billion in the first seven months of 2025. Adding to the positive outlook, hedge funds have recently increased their optimistic positions that predict the yuan could appreciate beyond 7 per dollar, banking on policy support and an increase in exporters converting dollar earnings. However, tensions persist as US-India trade disputes intensify, with President Trump reinforcing tariffs and voicing strong criticism of New Delhi following Prime Minister Modi's visit to China.
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