Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

The offshore Chinese currency yuan briefly rallied past the 7.0 per dollar milestone for the first time in 16 months on Wednesday, as investors digested China's stimulus measures to stabilize growth and the recent U.S. Fed rate cut kept the dollar on the back-foot.

China's central bank governor Pan Gongsheng Tuesday said that the country will cut the reserve requirement ratio (RRR) by 0.5 percentage point in the near future, providing about 1 trillion yuan (about 142.30 billion U.S. dollars) in long-term liquidity to the financial market.

Depending on the liquidity situation in the market, the RRR may be further lowered by 0.25 to 0.5 percentage point within the year, Pan told a press conference in Beijing.

Meanwhile, the U.S. Federal Reserve announced last week that it will slash the target range for the federal funds rate by 50 basis points, marking the first rate cut since March 2020 and signaling the start of a monetary policy easing cycle.

"On the one hand, as U.S. Federal Reserve kicked off a monetary policy easing cycle, the interest rate difference between the Chinese and U.S. currencies narrowed. On the other, the resilience of China's foreign trade and its high trade surplus have helped stabilize the Chinese yuan exchange rate. The recent introduction of a host of policies to stabilize growth has also significantly boosted market confidence," said Wen Bin, chief economist at the Beijing-based China Minsheng Bank.

Recently, the supply and demand of the foreign exchange market have become more balanced. Data released by the State Administration of Foreign Exchange showed that in August, the cross-border income and expenditure volume of enterprises, individuals and other non-bank sectors has changed from a deficit previously to a surplus of 15.3 billion U.S. dollars.

"The appeal of Chinese yuan assets has increased dramatically, attracting the inflow of overseas capital, and further promoting steady performance and gradual improvement of the Chinese yuan exchange rate. We have every reason to believe that with the continued support of policies and the fundamentals of the economy, the Chinese yuan exchange rate can stay in a balanced range and perform well," said Tian Lihui, director of the Institute of Finance and Development at the Nankai University in north China's Tianjin Municipality.

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

Chinese State Councilor Shen Yiqin urged China's para-athletes to aim for excellence at the upcoming Aichi-Nagoya Asian Para Games during a rally in Beijing on Saturday.

Shen, also head of the State Council Working Committee on Disability, visited the China Administration of Sports for Persons with Disabilities to meet with the Chinese delegation. She offered encouragement and motivation to the athletes, urging them to spare no effort in preparations and competition, and to bring greater honor to the motherland and the people.

Shen stressed the importance of using the Asian Para Games as practical experience to strengthen and prepare China's team for the 2028 Paralympic Games in Los Angeles. She called on the team to maintain high standards of sportsmanship and discipline, aiming for both athletic achievement and moral excellence.

Shen also emphasized the need to enhance friendly exchanges and better tell China's story and the story of Chinese persons with disabilities. She called for efforts to prevent and defuse various risks, ensuring the delegation's safety and success throughout the competition.

China announced on Saturday a 500-member delegation, including 312 athletes, to compete in 335 events across 17 sports at the Aichi-Nagoya Asian Para Games, marking the country's largest athlete contingent for an overseas edition of the Games.

The athletes have an average age of 28.8, ranging from 16 to 50 years old. The delegation includes 146 male and 166 female athletes, all of whom are amateurs and include workers, students and freelancers.

The Aichi-Nagoya Asian Para Games will be held from Oct 18 to 24, featuring more than 500 events across 18 sports, including para swimming, wheelchair basketball and sitting volleyball, with more than 3,000 athletes from 45 countries and regions expected to take part.

It will be China's fifth appearance at the Asian Para Games.

Chinese state councilor meets Chinese Asian Para Games team