06.02.202605:47:42UTC+00Offshore Yuan Set for Biggest Weekly Gain Since 2023

The offshore yuan maintained a level around 6.93 per dollar on Friday, aiming for its most substantial weekly rise since May 2023. This appreciation is driven by seasonal demand and an optimistic mood following a conversation between former U.S. President Donald Trump and Chinese President Xi Jinping. As the Lunar New Year holiday approaches, companies typically convert more dollars to yuan to fulfill payroll and bonus requirements. The market's confidence was further buoyed after Trump described his phone call with Xi as "excellent," sparking anticipation of a potential visit to China in April and highlighting his favorable relationship with Xi. However, any gains in the yuan might moderate due to potential short-term strength in the U.S. dollar and lighter trading volumes approaching the holiday. Additionally, the People's Bank of China (PBOC) set the daily midpoint at 6.9590 per dollar, which was weaker than a Reuters projection and an easing from a 32-month peak established earlier this week. Investors are now looking forward to next week's inflation figures, which will provide insights into China's economic conditions and the future direction of monetary policy.