FX.co ★ Offshore Yuan Poised for Biggest Annual Gain Since 2020

The offshore yuan advanced beyond 6.98 against the dollar on Wednesday, nearing the fifteen-month peak reached in the previous session, and is poised for its largest yearly gain since 2020. This development comes as stronger-than-anticipated PMI data uplifted market sentiment. According to official figures, China's composite PMI climbed to a six-month high at 50.7 in December 2025. Notably, the manufacturing PMI reverted to growth territory for the first time since March, posting a mark of 50.1 compared to November's 49.2, while the non-manufacturing PMI achieved a five-month high, registering at 50.2 against the prior 49.5. Concurrently, a private survey revealed an unexpected rise in the manufacturing PMI, which increased to 50.1 from a four-month low of 49.9 in December. These positive indicators align with China's growth objective of approximately 5% for this year. Nevertheless, the yuan's swift appreciation has led state media to issue warnings against assuming unidirectional bets. The central bank has committed to mitigating "overshooting risks" by setting its daily yuan reference rate below market forecasts for the last two weeks.