Offshore Yuan Logs Fourth Straight Monthly Advance

The offshore Chinese yuan has appreciated to approximately 6.94 against the US dollar in January, marking its fourth consecutive monthly gain, driven primarily by heightened demand from exporters converting foreign earnings into yuan to cover Lunar New Year bonuses and seasonal costs. This strength has been further bolstered by a positive domestic economic sentiment, fueled by China's robust trade surplus, renewed foreign interest in local stocks, and growing anticipation of more policy easing measures. Nevertheless, the People's Bank of China has tempered the rally by consistently setting its daily midpoint rate weaker than market forecasts since late November, reflecting efforts to prevent overly rapid appreciation, even as the US Treasury recently described the yuan as substantially undervalued and urged Beijing to permit a more timely and orderly strengthening of the currency.

Asian currencies are mixed on Monday. Japanese yen is down 0.33%. The Indonesian rupiah is up by 0.22%, while the Indian rupee is up 0.05%. The Malaysian ringgit is up by 0.20%, and the Philippine peso is down by 0.06%. The Australian dollar higher by 0.26%, the Singapore dollar is lower 0.19%, and the South Korean won is down 0.73%.