China’s central bank has set the yuan’s daily reference rate at its strongest level in 15 months, as the currency strengthened in offshore trading and briefly broke through the closely watched seven-per-US-dollar threshold.
The move followed a recent rally in the Chinese currency, with the offshore yuan briefly breaching the benchmark rate of seven against the US dollar last week.
By midday on Monday, the offshore yuan was trading at 7.009 per US dollar.
Analysts at China International Capital Corporation (CICC) said in a note on Saturday that US dollar weakness, along with seasonal factors such as exporters’ year-end foreign-exchange conversions, were the “immediate drivers” of the yuan’s strength.
Given that US President Donald Trump has repeatedly called on US Federal Reserve chair Jerome Powell to cut interest rates this year, the “market broadly believes the next Fed chair is likely to seek to push forward a rate-cutting cycle”, they said.
Trump said in a social media post last week that he expected the new chair to lower interest rates if markets were doing well, adding that anyone who disagrees with him “will never be the Fed Chairman!”
