London Daily

Focus on the big picture.
Saturday, Jul 05, 2025

China’s yuan surges to 17-month high on Biden US presidential hopes

China’s yuan surges to 17-month high on Biden US presidential hopes

The offshore yuan extended its rally against the US dollar on Tuesday after US President Donald Trump lost ground to Democratic nominee Joe Biden in new polls ahead of November’s election.

China’s yuan trading outside the mainland surged to its highest level in 17 months on Tuesday after new polls showed challenger Joe Biden had increased his lead over US President Donald Trump in the race for the White House that is less than a month away.

On Tuesday, the offshore yuan extended its rally to 6.7136 per US dollar in thin market flow conditions, rising in tandem with improving sentiment in global financial markets, with the Australian dollar and the Singapore dollar also gaining for a second consecutive day.

The onshore yuan foreign exchange market remains closed for the “golden week” national holiday, with trading set to resume on Friday.

New election polls show support for incumbent Trump is sliding after his aggressive performance at last week’s first debate and since he tested positive for the coronavirus.

“The market thinks Biden has a better chance of winning and a rising advantage of the Democrats [to take control] in the Senate,” said Ken Cheung Kin-tai, chief Asian currency strategist within the East Asia treasury department at Mizuho Bank. “This is positive for the yuan because Biden is not supportive of tariffs and trade policy to handle China’s issues.”

An NBC News/Wall Street Journal national poll conducted after the first debate had Biden on 53 per cent and Trump on 39 per cent – a gap six points wider than in their previous poll two weeks earlier.

Biden has previously criticised Trump’s trade policy against China as damaging the agriculture and manufacturing sectors in the United States, and has called for the dropping of unilateral tariffs.

Interruptions and insults dominate first Trump-Biden US presidential debate


China had allowed the yuan to decline by as much as 14 per cent against the US dollar between mid-2018 and mid-2019 in response to new US tariffs, but analysts said that if US-China trade tensions ease, that could point to a reversal of the yuan’s decline.

The People’s Bank of China in recent months has repeated its pledge to maintain “the basic stability of the yuan”, suggesting China has not been attempting to actively undervalue its currency.

“The yuan exchange rate is mainly determined by market supply and demand. The central bank will not use the yuan exchange rate as a tool to deal with disruptions from trade frictions,” China’s central bank said in its second quarter monetary policy report.

As part of the phase one trade deal signed with the US in January, China agreed not to devalue its currency to gain a competitive trade advantage.

Trump was discharged from hospital on Monday, and his doctors said they are “cautiously optimistic” about his condition. However, the state of Trump’s health will not be clear until the end of the week, which will determine if he is able to continue in-person campaigning in the key swing states of Florida, Wisconsin, Pennsylvania and Minnesota, while also attending the second debate with Biden now scheduled for next week.

“It’s worth noting Trump seems to be on steroids – which traditionally are only given to folks who are really in bad shape around Covid-19,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets.

“In the scenario of Trump falling to Covid-19 or in someway being incapacitated, [Vice-President Mike] Pence becomes the de facto face of the Republican ballot, which almost surely raises the view that this is going to be a blue tsunami,” Van-Petersen said, referring the colour traditionally associated with Biden’s Democratic Party.

Trump returns to the White House after only three days in hospital for Covid-19 treatment


In addition to any political calculations, investors are buying the yuan because China’s recovery is on track while the US dollar is expected to weaken, analysts said.

The yuan is one of the best performing currencies this year as China has racked up a massive trade surplus following its successful suppression of the coronavirus pandemic.

The better-than-expected purchasing managers’ index for September also points to a pick up in manufacturing investment in the coming months, resulting in better confidence in profitability along with consumption growth, analysts said.

Given the improvement in the economy, Chinese leaders may be shifting towards a stronger exchange rate policy to support domestic consumption in the coming years and to help internationalise the yuan by attracting more foreign inflows into its domestic capital markets, analysts added.

Increased investor demand for the yuan to allow for the purchases of more Chinese stocks and bonds would also increase its value.

“The yuan’s appeal is resonating with people who missed the initial bandwagon move and are playing ‘catch up’,” said Stephen Innes, chief global markets strategist at investment firm AXI. “Regulators are also very much open to a stronger yuan because [China] wants to promote both its bond and equity markets.”

Paul Mackel, head of emerging markets foreign exchange research at HSBC, forecasts the yuan to rise slightly to 6.70 per dollar by the end of the year before appreciating further to 6.60 by the end of 2021, partly because of an acceleration in bond investments from global investors.

A lower yuan exchange rate figure means it takes fewer yuan to purchase one US dollar, indicating a stronger Chinese currency.

Newsletter

Related Articles

0:00
0:00
Close
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
×