Offshore Yuan Rises as PBoC Defends Policy

The offshore yuan rose to around 6.69 per dollar on Friday, after holding steady for two consecutive sessions as China defended its exchange-rate policy amid trade talks with the European Union. EU officials have increasingly pointed to exchange-rate imbalances, arguing that the yuan’s undervaluation bolsters Chinese exporters’ competitiveness and exacerbates the bloc’s widening trade deficit with China, which exceeds €1 billion ($1.12 billion) a day. Meanwhile, the People's Bank of China argued that exchange-rate adjustments alone would not resolve structural imbalances in the global economy and that China’s export strength reflects growing industrial competitiveness rather than currency policy. Both developments came as the yuan strengthened against most major currencies this year, while the euro has fallen more than 10% against the yuan from its January peak, weighed down by sluggish European growth and France’s fiscal challenges.