FX.co ★ Offshore Yuan Retreats, Still Poised for Monthly Gains

The offshore yuan depreciated to approximately 7.12 per dollar on Friday, falling back from a peak in over nine months recorded in the previous session, thus ending a five-day upward trajectory. Despite this decline, the yuan remains poised for notable monthly gains, achieving its strongest position since November. This strength has been supported by indications from the People's Bank of China suggesting a modification in their currency strategy as trade conditions improve, enhancing the country's economic prospects. This week, the PBOC raised its daily reference rate by 0.4%—the largest adjustment since September 2024—and established the rate at 7.1030 per dollar today, representing the strongest guidance since November. This signifies a shift from the PBOC's earlier cautious approach, where currency stability was prioritized amid economic uncertainty and increased geopolitical tensions, especially in the early phases of the US-China trade dispute.