China’s offshore yuan strengthens to its highest level since February 2023 while the PBOC sets a firmer-than-expected reference rate.
China’s offshore yuan (CNH) surged to its strongest level against the USD since February 2023, reflecting market sentiment ahead of high-level U.S.-China talks. The People’s Bank of China set the USD/CNY reference rate at 6.8401, above the estimated 6.7888, signaling a controlled but firm currency stance.
The move follows a broader shift in Asian FX markets, with the yen flipping from undervalued to overvalued after suspected intervention by Japanese authorities. South Korea’s finance ministry also flagged excessive KRW volatility, citing a disconnect with economic fundamentals.
Equity markets in the region showed resilience, with the Nikkei225 and KOSPI supported by optimism around China’s economic resilience and AI-driven growth narratives. UBS and Morgan Stanley maintained bullish outlooks on Chinese stocks amid the developments.