FX.co ★ Yuan Holds Firm at 3-Year Peak

The offshore yuan held above 6.83 per USD, consolidating near its highest level in more than three years as investors assessed a fragile US–Iran ceasefire. The deal, based on a 10-point framework and conditional on reopening the Strait of Hormuz, initially lifted risk appetite and pressured the dollar.

That optimism faded as sentiment turned cautious following fresh Iranian accusations of violations, including disputes over uranium enrichment, ongoing Israeli strikes in Lebanon, and alleged airspace incursions.

Against this backdrop, China remains relatively better positioned than most of its Asian peers. The yuan has appreciated about 1.0% against the dollar so far this month and is up 2.4% year-to-date, reflecting market expectations of reduced geopolitical risk. The currency’s resilience is underpinned by China’s substantial oil reserves and comparatively stable energy supply chains.

Attention now shifts to Friday’s inflation data, which are expected to show a modest increase in annual consumer prices and a return to year-on-year growth in producer prices for the first time since 2022.