The yuan strengthened to its highest level in more than four years today after China's central bank kept signaling support for the currency through a stronger daily fixing for an eighth consecutive day, the longest such streak since 2023. The offshore yuan rose as much as 0.1% to around 6.70 per dollar, its strongest level since July 2022. The rally comes ahead of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Washington on Sept 24, where trade and economic relations are expected to remain a key topic of discussion. Meanwhile, Shanghai Clearing House began providing central counterparty clearing services on Sept 14 for spot transactions in Singapore dollars, New Zealand dollars and the Thai baht, with 12 banks participating and 996 million yuan in transactions entering the clearing system on its first day of operation, expanding the number of currencies able to access China's domestic central clearing network. Shanghai Clearing House already provides central clearing for yuan transactions involving the U.S. dollar, euro, pound, Australian dollar and yen. The yuan has remained firm even as the U.S. dollar strengthened after the Federal Reserve decided to raise interest rates, and despite signs that credit demand in China remains weak. Chinese banks extended only 60 billion yuan in new loans in August, far below the 400 billion yuan economists had expected, while outstanding yuan-denominated loans grew just 4.9% year on year, a record low.
Fed rate hike mentioned as strengthening the dollar, pushing US yields up (bond prices down).
