Offshore Yuan Set for Fourth Monthly Gain

The offshore yuan has strengthened to approximately 6.94 per dollar in January, marking its fourth consecutive monthly gain. This increase is driven by heightened currency demand from exporters ahead of the Lunar New Year, as firms convert foreign earnings into yuan for bonuses and expenses. The currency's rise is supported by a positive domestic outlook, a trade surplus, and renewed investor interest. However, the People's Bank of China has limited appreciation by setting a weaker daily reference rate. The US Treasury has described the yuan as "substantially undervalued" and urged China to allow a more orderly strengthening of the exchange rate.