In August, the yuan nosedived to its lowest point since 2008 after Washington blacklisted Beijing as a “currency manipulator”, a decision that was reversed by the US Department of the Treasury on 13 January.
China’s yuan traded at around 6.9 per dollar in the offshore market on Monday, hitting its highest level since July.
The increase came after the Trump administration dropped China’s designation as a currency manipulator.
Bloomberg cited Mitul Kotecha, a senior emerging-markets strategist at Toronto-Dominion Bank in Singapore, as saying that “having a stronger currency is one way to show good will”.
The view was echoed by Julian Emanuel, chief equity and derivatives strategist at the global equity research company BTIG, who was quoted by Marketwatch.com as saying that “while markets were firmly focused on Middle East tensions, the Chinese yuan quietly strengthened below its uptrend that developed alongside the trade war, ahead of phase one’s signing expected on Jan. 15”.
The move came ahead of the planned Wednesday signing of the US-China Phase One Trade Agreement which is expected to put an end to the two countries’ tariff war which has been ongoing since 2018.