FX.co ★ Offshore Yuan Stabilizes

The offshore yuan remained steady at approximately 7.17 per dollar on Tuesday. This stabilization was influenced by a decline in the strength of the US dollar following President Trump's announcement of a new set of tariffs. These tariffs target fourteen countries that have yet to reach trade agreements with the United States, including a 25% duty on key exporters like Japan and South Korea. Moreover, Trump issued an executive order postponing the implementation of reciprocal tariffs from July 9 to August 1.

At the same time, sentiment towards the yuan was boosted by speculation that China might double the quota for the southbound component of the Bond Connect scheme. This potential move would enhance domestic investors' ability to purchase overseas bonds, aiding efforts to further internationalize the currency. Additionally, the stabilization of the yuan was supported by the People's Bank of China, which set the daily reference rate at 7.1534 per dollar—slightly weaker than the previous rate but stronger than market predictions. Investors are now looking forward to June's consumer price index (CPI), which is projected to remain subdued, along with the producer price index (PPI) and trade data.