FX.co ★ Offshore Yuan Returns to Fall

On Thursday, the offshore yuan weakened to approximately 7.29 against the dollar, reversing its gains from the previous session. This shift in investor sentiment was prompted by statements from US Treasury Secretary Scott Bessent, which tempered expectations of easing trade tensions between the US and China. Bessent pointed out that there had been no proposals for unilateral tariff reductions and that formal negotiations had not yet begun. While US President Trump recently signaled a more conciliatory approach towards China and Beijing expressed openness to trade discussions, the absence of solid commitments has led markets to adopt a cautious stance. This has resulted in a retreat of the yuan and dampened the recent wave of investor optimism. Simultaneously, China’s State Administration of Foreign Exchange pledged to limit excessive exchange rate volatility and curb irregular cross-border capital flows. The agency also committed to enhancing regulatory oversight, expanding its range of policy tools, and addressing pro-cyclical market behaviors.