Global Market: China's yuan hits four-year high on export strength, weak dollar

China's yuan traded in a narrow range on Wednesday after briefly strengthening to its highest level in more than four years, supported by robust export growth, resilient economic activity and a broadly weaker US dollar.

The onshore yuan touched 6.6765 per dollar in morning trade, its strongest level since June 28, 2022, before easing slightly to 6.6791 as of 0250 GMT.

The US dollar remained subdued after falling to a three-week low in the previous session, with lower US Treasury yields and weaker oil prices reducing the currency's appeal.


Read more: Global Market Today: Asian shares, US futures rise on AI-trade revival

China's economic growth in the third quarter exceeded expectations, as strong exports offset cautious consumer spending, highlighting the resilience of the world's second-largest economy despite persistent domestic demand concerns.

Domestic economic resilience, capital inflows and rising corporate demand to convert foreign exchange earnings into yuan have reinforced the Chinese currency's appreciation trend, analysts at Caitong Securities said in a note.

Read more: Bessent sees no spillover from France bond market’s turmoil

However, the pace of appreciation could moderate as geopolitical uncertainties may support the dollar and marginally dampen capital inflows, the analysts added.

Goldman Sachs estimated that China attracted net foreign exchange inflows of $50 billion in September. The foreign exchange conversion ratio, which measures the proportion of foreign currency receipts converted into yuan, edged up to 66% from 63% in the previous month.

The yuan has gained 0.4% against the dollar this month and strengthened 4.7% so far this year.

The People's Bank of China has gradually allowed its daily midpoint rate to strengthen alongside the currency's gains. Before the market opened on Wednesday, the central bank set the midpoint at 6.7192 per dollar, its strongest level since February 2, 2023, although the fixing was 413 pips weaker than a Reuters estimate.

China allows the onshore yuan to trade within a 2% band on either side of the central bank's daily midpoint.

Meanwhile, the offshore yuan traded at 6.6786 per dollar, down around 0.05%. The dollar index, which measures the US currency against six major peers, stood at 101.77.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)