The offshore yuan traded around 6.81 per dollar on Wednesday, hovering near its strongest level since March 2023, supported by improving sentiment about China’s economic outlook and a softer US dollar. China’s economy is projected to grow 4.8% year-on-year in the first quarter of 2026, despite the ongoing war in the Middle East, representing a modest pickup from the 4.5% expansion recorded in the fourth quarter of 2025—the slowest pace since the post-pandemic reopening in 2022.
The protracted conflict in the Middle East has had only a limited impact on China, reflecting years of efforts to bolster energy security and reduce vulnerability to external shocks. Externally, the yuan has also benefited from broad dollar weakness, as safe-haven demand for the greenback has eased following reports that Washington and Tehran are preparing for a second round of talks in the coming days.