China's offshore yuan hits strongest in four years ahead of Trump — Xi meeting

SHANGHAI, Sept 18 (Reuters) — China’s offshore yuan on Friday hit the strongest level against the dollar in four years, as traders bet this week’s US rate hike has not derailed the yuan’s appreciation cycle. 15% and is on track for its third straight weekly gain, as traders await next week’s meeting between US President Donald Trump and Chinese leader Xi Jinping, which could ease some trade tensions. 6% by the end of this year. “Export proceeds conversion and an undervalued CNY are the key drivers for this view, as well as increasing pressure from the G7 to address trade imbalances,” it said in a note.

6956 per dollar in morning trade, the strongest level since July, 2022. 6983 per dollar in late morning trade, the strongest level since January 2023. S. Federal Reserve, but the rally eased on Friday.

S. has entered a rate hike cycle, "but the yuan's path of appreciation has not ended". The yuan will continue to strengthen, bolstered by China's strong experts and year-end settlement of dollar receipts, the brokerage said. Lynn Song, ING's Greater China chief economist, agreed that the yuan’s trajectory has derailed from its close correlation with US-China yield spreads over the last year.

“This is largely thanks to the high quantities of foreign exchange being held by Chinese exporters over the past few years, and the shift toward CNY appreciation expectations," Song said. " The caveat, however, is that if the Fed becomes more hawkish, "eventually the yield spreads should widen to a level which tempts more investors back to the market, and places depreciation pressure on the CNY”. Another potential source of downward pressure on the yuan is China’s deflationary risks, according to Bank of America. ” LEVELS AT 03:37 GMT GMT INSTRUME CURRENT UP/DOWN( % CHANGE DAY'S DAY'S NT vs USD -) VS.

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